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The Family Business in Tourism and Hospitality
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The Family Business in Tourism
and Hospitality
Donald Getz,
Jack Carlsen
and
Alison Morrison
CABI Publishing
3
CABI Publishing is a division of CAB International
CABI Publishing
CAB International
Wallingford
Oxfordshire OX10 8DE
UK
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D. Getz et al. 2004. All rights reserved. No part of this publication may be reproduced
in any form or by any means, electronically, mechanically, by photocopying, recording
or otherwise, without the prior permission of the copyright owners.
A catalogue record for this book is available from the British Library, London, UK.
Library of Congress Cataloging-in-Publication Data
Getz, Donald, 1949-
The family business in tourism and hospitality / Donald Getz, Jack
Carlsen, Alison Morrison.
p. cm.
Includes bibliographical references and index.
ISBN 0-85199-808-9 (alk. paper)
1. Tourism. 2. Hospitality industry. 3. Family-owned business
enterprises. I. Carlsen, Jack. II. Morrison, Alison. III. Title.
G155.A1G439 2003
910.68--dc22 2003018338
ISBN 0 85199 808 9
Typeset by AMA DataSet, UK.
Printed and bound in the UK by Cromwell Press, Trowbridge.
4
Contents
About the Authors ix
How to Use the Book xi
Preface xiii
Acknowledgements xvii
1 Introduction 1
Why Study Family Businesses? 1
Scope and Significance of Family Business 1
What is Family Business? 4
A Life Cycle Model for the Family Business 5
A Framework for Understanding Family Business in Tourism and Hospitality 9
Chapter Summary 18
References 18
2 Entrepreneurship and Family Business 21
Introduction 21
Entrepreneurial Process 21
Industry Specific Modifiers 29
Organizational Modifiers 32
Entrepreneurial Socio-economic Outcomes 35
Chapter Summary 35
References 38
3 Starting the Family Business 41
Introduction 41
Motivations and Goals 42
Research Evidence from the Tourism and Hospitality Industry 42
Antecedents: Where do Family Business Owners Come From? 58
Business Planning for New Family Businesses 60
Ownership, Organization and Governance 62
Chapter Summary 64
References 65
v
5
4 Sustaining and Developing the Family Business 67
Introduction 67
Failure and Success 67
Growing the Family Business 70
Preconditions and Barriers to Growth 72
Strategic Planning 74
Strategic Options 77
Strategic Marketing and Family Branding 81
The Seasonality Challenge and Strategic Responses in Bornholm 85
Chapter Summary 90
References 91
5 Balancing Family and Business through the Life Cycle 95
Introduction 95
Generic Challenges and Issues 95
Gender Challenges and Issues 101
Research Evidence from Western Australia 103
Involving the Next Generation and Succession 104
Barriers to Inheritance 105
Research Findings from Australia, Canada and Denmark 107
Planning for Involvement and Succession 111
Chapter Summary 113
References 114
6 Farm-based Family Businesses 117
Introduction 117
Case 6.1 Alborak Stables 117
Case 6.2 Taunton Farm Holiday Park 120
Case 6.3 Ol MacDonalds 123
Chapter Summary 125
7 Family-owned and -operated Small Hotels 127
Introduction 127
Case 7.1 Gunnar and Maude Bergstedt, re, Sweden 127
Case 7.2 Cricklewood Hotel 129
Case 7.3 Millestgrden 130
Chapter Summary 132
8 Family-owned Nature-based Resorts 133
Introduction 133
Case 8.1 Crystal Creek Rainforest Retreat (CCRR) 133
Case 8.2 OReillys Rainforest Guesthouse 135
Case 8.3 River Valley Ventures, New Zealand 139
Chapter Summary 143
References 144
9 Family-owned and -operated Tour Companies 145
Introduction 145
Case 9.1 Wild Over Walpole (WOW) 145
Case 9.2 Minnewanka Tours 148
Case 9.3 reguiderna 151
Chapter Summary 152
vi Contents
6
10 Family-owned Tourist Attractions and Wineries 153
Introduction 153
Case 10.1 Pelham Family Estate Winery 153
Case 10.2 Rivendell Gardens 155
Case 10.3 Billabong Sanctuary 157
Chapter Summary 160
Reference 160
11 Cross-case Analysis 161
Introduction 161
Family Issues 162
Business Issues 164
Ownership Issues 168
Chapter Summary 171
References 171
12 Implications for Family Businesses and Tourism Destinations 173
Introduction 173
Practical Implications for the Family Business in Tourism and Hospitality 173
Balancing Family and Business through the Life Cycle 180
Implications for Tourism and Destination Management 182
Chapter Summary 184
References 184
13 Implications for Research and Theory 185
Introduction 185
Developing a Research Agenda 185
Theory-building 189
Chapter Summary 195
References 195
Bibliography 197
Index 209
Contents vii
7
8
About the Authors
Donald Getz
Donald Getz is a Professor of tourism and hospitality management in the Haskayne School of
Business, University of Calgary, Canada. His research interest in family business began with
doctoral research in the Highlands of Scotland, as many of the tourism and hospitality businesses
studied were operated by individuals and families. He has conducted specific family-business
research in Canada, Denmark, Sweden, New Zealand and Australia, involving a number of
individual and institutional collaborators. This work has been financially supported in part by the
Family Business Research Endowment at the University of Calgary. Professor Getz also does a
considerable amount of research and publishes in the area of event management and event
tourism, and is the author of the book Event Management and Event Tourism (Cognizant, 1997).
He has also authored books entitled Explore Wine Tourism (Cognizant, 2000), The Business of
Rural Tourism (with Stephen Page: Thompson International Business Press, 1997) and Festival
Management and Event Tourism (Van Nostrand Reinhold, 1991).
Jack Carlsen
Dr Carlsen is the Malayan United Industries (MUI) Chair in Tourism and Hospitality Studies within
the Curtin Business School, Curtin University of Technology, Western Australia. He received his
first grant for Family Business Research in 1998 and has since published papers in the Journal of
Sustainable Tourism, Tourism Management, and Family Business Review and presented papers
at the International Congress of Small Business, Asia Pacific Tourism Association and the Council
of Australian University Tourism and Hospitality Education conferences. Jack has a Bachelor
of Economics and a Doctor of Philosophy from the University of Western Australia. His other
research interests include tourism economics, tourism management and sustainable tourism. Jack
is Founder and Co-Director of the Curtin Sustainable Tourism Centre at Curtin University of
Technology.
Alison Morrison
Dr Alison Morrison is Reader in Hospitality Management and Director of Research within
Strathclyde Business School, University of Strathclyde. She has attained a BA Hotel and Catering
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9
Management from the University of Strathclyde, an MSc in Entrepreneurship from Stirling
University and a PhD from the University of Strathclyde with the thesis titled Small Firm Strategic
Alliances: the UK Hotel Industry. Alison has edited and authored five text books in the areas of
marketing, hospitality, entrepreneurship and franchising and has published widely in generic
business and specialist hospitality and tourism academic journals. She regularly undertakes
international assignments teaching and consulting on entrepreneurship within the hospitality
and tourism sectors.
Contributors
A number of researchers have contributed cases or research material to this book, and the authors
are very grateful for their valuable efforts.
Chris Ryan, Professor, University of Waikato, New Zealand: author of the case study River
Valley Ventures.
Tage Petersen, Tourism and Regional Research Centre, Bornholm, Denmark: co-researcher
with Donald Getz of the family business survey in Bornholm and co-author of a paper on
growth-oriented entrepreneurship.
Per Ake Nilsson, Tourismand Regional Research Centre, Bornholm, Denmark: co-author with
Donald Getz of a paper on seasonality, based on the Bornholm data.
Tommy Andersson, Professor, University of Gothenburg, Sweden: author of the three case
studies from Sweden.
Lynn Batchelor, Griffith University, Australia: co-author of the case study, OReillys
Rainforest Guesthouse.
Shane OReilly, of OReillys Rainforest Guesthouse: co-author of the case study, OReillys
Rainforest Guesthouse.
x About the Authors
10
How to Use the Book
For Academics and Researchers
Given that this is the first book on family business in the tourism and hospitality industry, it has
several academic goals:
To define and explain the importance of family business studies to the study of tourism and
hospitality.
To present and assess pertinent literature that has previously not been synthesized in the
context of family business studies.
To establish concepts and research directions for advancing this area of scholarship.
The authors also hope to make a contribution to the mainstream study of family business by
demonstrating its application to a specific industry, and the many industry-specific modifiers that
affect family businesses.
Where can the book be used as a text? Business and management schools with tourism and
hospitality programmes are encouraged to incorporate family business studies into their curricula,
in recognition of the importance this class of business has in the industry and also because there
are increasing numbers of students interested in becoming entrepreneurs. The book could be
a stand-alone text or a supplement to more general books on small business management,
entrepreneurship, new ventures and even destination competitiveness.
Using Case Studies
The cases developed for this book, most of them original and unpublished elsewhere, are really
case histories. They have been a rich source of insights into actual family business operations and
related issues. Cases based on in-depth interviews, as they all are in this book, provide a better
source of information than surveys because the respondents are directly involved in case prepara-
tion and in the end approve of the contents. We also provide original research data from a number
of surveys, and the case studies illustrate many of the important findings in those survey results.
The cases do present problems for researchers, as they are essentially reflections of the past,
frozen at one point in time. Several of our respondents, for example, have reported major changes
in their circumstances subsequent to approving the material contained in this book, while several
contributions have been updated right to the last possible minute before finalization of the manu-
script. Although several of the cases demonstrate problems and howfamilies must face adversity, the
xi
11
authors believe that collectively they understate the problems faced by families in business. System-
atic research comparing success stories with failures would certainly add a lot to our understanding of
family businesses in tourism and hospitality.
In teaching applications, individual cases can be used to introduce or illustrate specific issues,
such as entrepreneurship, founders goals, strategies, or barriers to inheritance. The cross-case
analysis contained in Chapter 11 ties themall together and yields 30 general issues that apply across
some or many of the cases. This analysis can also be used to encourage students to become aware of
similarities and differences between cases and the underlying reasons, and in particular reveals
remarkable similarities in family business experiences. But it is important to emphasize that the
cases were not selected randomly, nor do they reflect best practices or success stories. The cross-case
analysis is not generalizable to the whole population of family business in the industry nor in any of
the countries.
For Students
This book introduces students to the field of family business studies, with numerous references to
the main body of literature. The basic definitions, concepts and themes in family business studies
are summarized in Chapter 1, with subsequent chapters focusing on more specific family business
issues and how they are applied to tourism and hospitality. The ties to entrepreneurship and small
business studies are made explicit in Chapter 2 and these important themes are developed through
the book.
Students coming from a family business background will find this book invaluable in helping
themmake decisions about entering the family business or starting their own. It is a difficult challenge,
but countless people around the world seek that challenge and many find it completely fulfilling.
At a minimum, the book will help them assess their own ambitions, goals and priorities regarding
a professional career versus self-employment and entrepreneurship.
Independent of their own plans, the book will help them understand the numerous family
businesses they will encounter, or perhaps work for. Their owners are a special part of the business,
and the families face a number of unique challenges. Understanding the family business will also help
them appreciate the complexity of the industry when it comes to planning, marketing and fostering
growth or innovation.
For Family Business Owners and Managers
Although the book was not designed primarily for the industry, it will prove useful to family business
owners and those who manage family businesses. In particular, there are many sections covering
the practical management of family businesses, such as ownership and structure, strategic planning,
issues surrounding succession and inheritance, and even family branding.
xii How to Use the Book
12
Preface
This is the first book dealing with family business in tourism and hospitality. Given the importance,
and in many areas the predominance, of families, couples (called copreneurs) and individuals
(sole proprietors) running tourism and hospitality businesses, it is long overdue.
The Family Business in Tourism and Hospitality provides a comprehensive overview of this
emerging field of study, based on available literature, research by the authors and new case studies.
It seeks to make a theoretical and didactic contribution both to the study of tourism and hospitality,
and to the generic field of family business studies. Researchers will benefit from new insights on
the importance of the family in business management, and the significance of family businesses in
destination competitiveness, economic and community development.
Students in tourism and hospitality programmes will benefit from a greater understanding of
the opportunities and challenges associated with family business practice in this industry. Many
students in these programmes come from a family business background and might even be
expected to join an existing family firm. Others will be contemplating entrepreneurial ventures in the
industry, and both groups need to be better educated about the management of a family- or
owner-operated business. And, of course, just about every graduate will eventually come into
professional contact with family businesses and should therefore be cognizant of what businesses
in this sector need.
It is not our intention to produce a how-to book for establishing or operating a family business,
but there are a number of sections that have very practical applications. We address the business
plan, strategic planning, succession planning, marketing, organizational and governance issues, and
some financing and investment challenges. The principal purpose in doing so is to show where
exactly family considerations intrude on business management, and to discuss (wherever possible)
industry-specific issues. These management sections have also been added to increase the appeal of
the book to the industry, and to show students and scholars where theory and practice must be
brought together.
Objectives and Outline of the Book
The books specific objectives are:
1. To advance the study of family business within tourismand hospitality, with particular reference
to the following perspectives:
its scope and significance;
management of the family business;

xiii
13
destination competitiveness;
economic and community development.

2. To identify the unique opportunities, challenges and issues facing family business in this
industry, thereby adding to the generic family business literature.
3. To provide a text or reference work for students in the tourism and hospitality fields.
4. To provide a reference for teachers and academics.
5. To provide a reference work for family business owners and those contemplating a business
venture.
The starting point in the Introduction (Chapter 1) is to address the questions of why study the
family business, and what exactly it is. We identify generic issues that family businesses face and
explain a well-known family business model to shape discussion of the evolution of ownership, the
business, and the family. We then examine what is unique about family business in the tourism and
hospitality industry and how this relates to the core family business issues. A framework has been
developed for this purpose, encompassing setting modifiers (location, level of economic develop-
ment, and culture) and industry-specific modifiers (the nature of the service, hostguest relations,
cyclical demand or seasonality, destination life cycle, and unique business opportunities).
In Chapter 1 we begin to make use of the case studies provided in Chapters 710, and the
cross-case analysis in Chapter 11. Analysis of the cases led directly to the identification of 30 key
family-related issues within tourismand hospitality enterprise, and these are used to informthe more
generic and theoretical discussion of family business in Chapter 1.
The aim of Chapter 2 is to recognize family business as a distinct form of entrepreneurship.
It makes the connection between entrepreneurship, small and family businesses, focusing on the
unique entrepreneurial opportunities and challenges that are inherent in the tourismand hospitality
industry. The contribution of key industry-specific and setting modifiers as identified in Chapter 1 is
explored within the framework of a model that investigates the extent to which they act as filters to
either intensify or dilute the entrepreneurial process resulting in consequential entrepreneurial
socio-economic outcomes. Conclusions are drawn that highlight the unique factors associated with
entrepreneurship as related to tourism and hospitality family businesses, how they influence the
nature and evolution of such enterprises, and competitive and policy implications.
In Chapter 3 the critical issues of motivation and goals are examined first, particularly the
contrasts inherent in growth and profit-oriented entrepreneurship versus the more prevalent lifestyle
and autonomy motivations. Important antecedents to family business, including the influences
of education, experience and training, are considered. Business planning is then examined, as the
careful preparation and execution of a business plan is consideredto be a major indicator of potential
business success, and is certainly associated with achieving growth. Included in this section is an
outline of what the plan should include, with emphasis on several family-related issues. Ownership,
organization and governance are covered last in this chapter.
The first section of Chapter 4 identifies and examines the meaning of success and failure for
a family business, then focuses on specific challenges and causes of failure. Next, arguments for
growing a business are addressed, then preconditions and barriers to growth. This is followed
by analysis of generic and industry-specific strategies, a section on strategic planning, and separate
treatment of strategic marketing and family branding. Research findings are then presented on how
seasonality affects family businesses and various strategic responses from a sample of owners in
Denmark.
Chapter 5 examines key challenges and issues together with strategies and actions that are
actually employed, or are recommended by experts, to achieve a healthy balance. It starts with a
discussion of generic challenges and issues for family business, plus some that are specific to tourism
and hospitality. Different stages of the life cycle are addressed, including the sole proprietor,
copreneurial arrangements, the young business family with children, and the family working
together. There are special sections on the family and the environment, and gender issues. Some
research findings are presented to demonstrate real concerns fromrespondents in Australia, Canada
xiv Preface
14
and Denmark. Completing this chapter, attention is focused on issues relating to involvement of
children in the business, leading to a detailed look at inheritance and succession planning. The
concept of a family legacy is discussed in this context.
Chapters 710 contain case studies of real family businesses in this industry, organized by
sectors of the industry: farm-based; small hotels; resorts; tour companies; attractions. Chapter 11
consists of a cross-case analysis to identify 30 key themes and commonalities.
Two chapters summarize and conclude the book. The first, Chapter 12, draws management
implications for the owners/operators of family businesses in tourism/hospitality, as well as implica-
tions for tourism destination management, economic and community development. The final
chapter draws implications for research and theory, including analysis of gaps in the tourism and
hospitality literature pertaining to family business, and a set of detailed propositions that can be used
to develop theory. The 30 major themes identified in Chapter 11 are re-visited in the two concluding
chapters.
Preface xv
15
16
Acknowledgements
The three principal authors are grateful to the earlier named contributors for their valuable
contributions to this book. As well, we are sincerely grateful to all the respondents who provided
details about their lives, families and businesses in the case studies. None of them requested
anonymity, and so their successes and failures can be tracked. This takes some courage, and per-
haps faith. The authors are extremely impressed with all the entrepreneurs and families engaged in
enterprise, with the risks they take, and the challenges they face daily.
Specific thanks are also owed to the agencies that helped fund or otherwise support the research
used in this book. Professor Getz is particularly grateful to the Family Business Endowment at the
Haskayne Business School, University of Calgary, and to the Regional and TourismResearch Centre
of Bornholm, Denmark. Professor Carlsen acknowledges initial support of the Faculty of Business
at Edith Cowan University and more recently the Curtin Business School, Curtin University of
Technology. Special thanks also to Ann Hall at Desktop Print for her work on the manuscript.
xvii
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18
1
Introduction
Why Study Family Businesses?
Not all businesses are started for growth, profit
maximization, or even for permanence many
are established or purchased with the needs and
preferences of the owners and their families
being paramount. That is the essence of family
business, and it sets them apart from enter-
prises in which the owners and their families
matter little to the strategy or operations of the
enterprise.
Although it is widely accepted that the
tourismand hospitality sectors are dominatedby
small, owner-operated business, little has been
written specifically about the family dimension.
The thorough review of tourism and hospitality
literature contained in this book reveals growing
attention to small businesses and entrepreneur-
ship in this industry, but until now the core
family-related issues have been neglected. And
while many books and manuals have been
published to guide families and owner-operators
in generic business terms, none have dealt with
the unique set of opportunities and issues that
stem from owning and operating a business in
tourism and hospitality.
Interest in, and research on, family business
has been accelerating (Sharma et al., 1996;
Smyrnios et al., 1997). This attention is long
overdue, given the scale and importance of
family businesses in most countries (Lank, 1995;
Wortman, 1995). Small businesses predominate
in emerging sectors such as nature tourism
(McKercher, 1998), and most of these are run by
owner-operators and families. Rural studies in
general almost inevitably touch on family
business matters (see, for example, Page and
Getz, 1997).
Why is it important to devote research and a
full book to the family business in this industry?
There are a number of perspectives to be consid-
ered, as explained in the following sections.
Scope and Significance of
Family Business
In most countries family business is the domi-
nant form of business ownership and manage-
ment. Historically, companies and other forms
of ownership developed following individual
and family-run farms and businesses, particu-
larly to meet the needs of generating larger
amounts of capital and dealing with legal issues
such as protection against lawsuits and bank-
ruptcy. It was the Industrial Revolution of the
18th century that replaced family-based craft
industry with larger manufacturing enterprises.
More recently, the rise of a giant service sector
generated numerous new opportunities for
family ventures.
Although big, public companies tend to
attract the most attention, especially in terms of
share offerings, stock values and speculation,
family businesses will undoubtedly endure as
the backbone of enterprise. The desire for
autonomy to be ones own boss and
D. Getz et al. 2004. The Family Business in Tourism and Hospitality
(D. Getz, J. Carlsen and A. Morrison) 1
19
for family independence, appears to be a basic
and unchanging human trait. This motivator
accounts for many career-switching entrepre-
neurs who start up tourism and hospitality
businesses to escape what they do not like about
their existing work and to steer their own eco-
nomic future. But in lesser-developed econo-
mies there might be little choice either run
a business of your own, or move out. Tourism
in developing countries offers numerous
opportunities for self-employment and small,
family businesses that otherwise wouldnot exist.
Family businesses are especially dominant
in rural and peripheral areas because of tradi-
tional land-owning patterns and the impracticali-
ties of operating larger corporations in marginal
economies. Hence, farm-based tourism and
hospitality consists almost entirely of family
businesses. Increasingly, individual and family
investors are drawn to rural and peripheral
areas or small towns for lifestyle reasons,
and tourism/hospitality provides the economic
means to realize these goals.
The exact scale and significance of family
businesses remains subject to definitional and
measurement problems, so mostly we have esti-
mates. WestheadandCowling (1998) reporteda
number of studies that have found that family
firms account for over two-thirds of all businesses
in western, developed economies. In Europe,
70% of businesses are family owned or
controlled (Thomassen, 1992; Lank et al.,
1994). Middleton (2001) noted that in Europe
95% of tourism businesses, generating perhaps
one-third of total tourism revenue, are micro-
business andmost of these are family businesses.
It has been estimated that in the USA family
firms generate from 40% to 60% of the gross
national product (Ward and Aronoff, 1990)
and employ half the workforce (Gersisk et al.,
1997). Dyer (1986) and Rosenblatt et al. (1990)
suggested that 9095% of American businesses
are family owned or controlled. Shanker and
Astrachan (1996) estimated for the USA that as
many as 20.3 million family businesses exist,
accounting for up to 49% of the gross domestic
product and 59% of total employment.
In Australia, Smyrnios and Romano (1999)
said that family businesses make up 83% of all
private-sector companies andemploy more than
50% of the workforce, but the Commonwealth
of Australia (1997) noted that about half of all
enterprises qualify as family businesses that
is, businesses where there is more than one
proprietor from the same family. Canadian
data suggest that family-owned firms constitute
about 80% of all businesses (Dunlop, 1993).
The consulting firm Deloitte and Touche (1999)
said that family firms provided jobs for over
6 million Canadians out of a total population
of approximately 30 million.
In many countries statistics on the scope
and significance of family businesses are poor
or non-existent, partly because of the difficulty
in separating self-employment from business
ownership, and partly because the term family
business is not used or understood. These
definitional problems are discussed later.
The business management perspective
The importance of family business as a distinct
form of management has only lately been
recognized by academics, and has clearly been
paid very little attention by tourism and hospi-
tality scholars. Owner-operators and family-
owned businesses have been lumped into the
categories of small and medium enterprises,
which ignores the fact that ownership makes
a huge difference and that many are small
for very personal, deliberate reasons. Also,
the literature is full of references to mom and
pop operations which is usually a derisive term
stemming from the supposed insignificance of
this sector.
Consequently, little is known about the
management of the family business in tourism
and hospitality. What has been demonstrated
repeatedly, in many countries and settings,
is that tourism and hospitality attracts many
investors for lifestyle and autonomy reasons,
including the desire to be self-employed and the
opportunity to remain in, or move to, attractive
rural and resort areas. And there are many
unique opportunities for individual entrepre-
neurshipandfamily business withinthe industry.
Accordingly, the motives, goals and busi-
ness behaviour of owners are different from
other business types. Businesses owned and
operatedby individuals andfamilies are typically
not grown for the sake of getting bigger, nor are
they managed as if profit-making was the sole
2 Chapter 1
20
objective. Family issues intrude on all aspects of
the business, especially with regard to sharing
responsibilities, involving the children, and suc-
cession (inheritance) within the family. Tourism/
hospitality businesses impose a number of
special challenges on the family, particularly
seasonality of demand causing cash-flow fluctu-
ations, a high level of hostguest contact, almost
unlimited demands on the operators time, and
the intrusion of guests into family space and
time.
Do these fundamental differences necessar-
ily make family businesses weak and unimpor-
tant? Are there no growth-oriented entrepre-
neurs among them? This book tries to answer
these crucial questions. It is also hoped that
family business owners will themselves benefit
fromincreased understanding of their distinctive
form of enterprise, and that tourism and
hospitality students reading this book will better
appreciate the opportunities available to them
and the challenges faced by the many family
businesses they will inevitably encounter.
Tourism destination perspective
Family business, in many areas, is the founda-
tion of destination competitiveness. Small,
owner-operated businesses provide most of the
services and attractions in numeric terms, and
are the outlets for much of the visitors spend-
ing. The quality of experience realized in these
businesses helps to determine perceptions
of the destination as a whole. But if family
businesses are marginal in terms of profits and
sustainability, the destination can suffer.
Economic development perspective
Services, and tourism/hospitality in particular,
have become the economic engines in many
areas that would otherwise decline or remain
impoverished. In a globalizing world that
favours huge, transnational corporations, and
concentrates wealth in large cities and conur-
bations, mechanisms are needed to distribute
prosperity more widely. People who travel do
just that. So do investors who take new money
to create wealth-generating opportunities
outside the core areas.
There are numerous policy-related issues
involving the family business in terms of eco-
nomic development, not the least of which is the
fact that most owners do not want to grow their
business and will therefore not create very many
jobs. But perhaps some can be tempted and
assisted to generate employment for non-family
members.
Another concern is the lack of innovation
among the majority of tourism and hospitality
operators. Many people purchase existing
properties and do little with them. Others create
services that differ little from countless others.
Indeed, tourism and hospitality services by
definition are highly substitutable that is, the
consumer can go elsewhere and obtain the same
benefits. So where is true innovation and hence
long-term viability to come from?
Government andagencies wanting toretain
population in peripheral and rural areas need
to focus on creating employment. They need
answers to the questions posed earlier: is it
a sound strategy to assist all small business
start-ups? what about people desiring to
purchase a business? can the innovator and
growth-oriented entrepreneur be singled out for
special assistance?
Community perspective
The family is at the heart of many communities.
If the family also happens to be in business, its
potential contributions to community viability
and culture are magnified, and so too are its
responsibilities. Family businesses can and do
make a visible difference in rural and peripheral
areas, in small towns and resorts. Their contri-
butions to cities and the larger community
of nations are more difficult to demonstrate,
but given the economic significance of the
family business sector, are undoubtedly of great
importance.
What happens when family businesses
disappear and the families move away? At a
minimum the community loses continuity and a
degree of stability. And if the departers are not
replaced by other families, the community loses
population and without children its future.
Introduction 3
21
Certainly the mechanics of depopulation in rural
areas are well understood, as is the potential
contributionof tourismin general (see, for exam-
ple, Getz, 1986). The role of family businesses in
particular has not been examined.
Families, their values and actions are also of
concern to communities in terms of leadership in
economic development and the environment.
Because family-business owners tend to be
rooted in their communities, or might want to
make a positive contribution to their selected
homes, they should be expected to provide lead-
ership. The importance of this role is magnified
in areas dependent on tourism and hospitality
for their economic livelihood, and especially in
areas basing their appeal on nature and health.
What is Family Business?
Family business has no commonly accepted
meaning. Indeed, Sharma et al. (1996) and
Chua et al. (1999) comprehensively reviewed
the literature and found 34 definitions. Birley
(2001) also argued that in some countries the
term family business is not used, nor is it
understood. All discussion of family business
must therefore start with consideration of defini-
tional issues, and researchers are well advised
always to state their operational definitions.
We start withthe premise that a business of
any kind is a profit-making venture or enterprise
(Alcorn, 1982). There are, however, a number
of complications, especially within tourism
and hospitality, such as part-time businesses
(e.g. running tours on weekends while otherwise
employed), home-based businesses (which
sometimes border on being a hobby), economic
activities that are secondary to a main operation
(such as farm-based tourism), and a business not
easily separated from the family home (such as
B&B). Indeed, this industry is somewhat unique
in presenting the enterprising person or family
with so many business options.
Self-employment is a related concept.
Owning and operating a business makes
one self-employed, but a person can be self-
employed and not own or operate a business.
Provision of services (such as the sex trade or
selling things on commission) is not the same as
owning and operating a profit-making business.
Normally a business is a legal entity owned by
one or more people, although micro hospitality
ventures like B&Bprovisionwill not usually meet
this criterion. It is a fine point, and in this book
not too much is made of the real or implicit
distinctions.
Definitions of family business
At the most basic level a family business can be
defined as . . . an enterprise which, in practice,
is controlled by members of a single family
(Barry, 1975). This definition can encompass
businesses that involve only one owner, often
called sole proprietorship firms. Definitional
complications arise when non-family members
are involved in management or ownership
(such as a partnership), or when a family firm
goes public with a share offering. Other defini-
tions stress the degree of family involvement,
whether or not the business has been or will
be kept in the family across more than one
generation, or a mix of criteria (Westhead
and Cowling, 1998). In general, ownership and
managerial criteria are both used.
The 1995 Business Longitudinal Survey
(BLS) involving about 9000 businesses in
Australia (Commonwealth of Australia, 1997)
found characteristics of family businesses to be
somewhat elusive, but the three main elements
were said to be: succession (ownership remain-
ing within the family); employment of family
members (with or without management involve-
ment); and shared management responsibilities
(family members are jointly responsible for
running the business).
Chua et al. (1999) argued for an inclusive
definition of family business which would permit
hierarchical comparisons of sub-types, other-
wise the lack of comparability between studies
will defeat the whole notion of treating family
business as a separate field of inquiry. For
example, in the research undertaken by Getz
andCarlsen(2000) inWesternAustralia, the sole
criterion for including owners in the family busi-
ness category was that respondents answered in
the affirmative to this question: Is your business
family owned (i.e. owner-operated, or one fam-
ily owns controlling interest)? This self-selection
method has the advantage of being easily under-
stood by respondents and does not impose a
4 Chapter 1
22
narrow definition. It allows analysis by other
factors such as ownership type, participation by
other family members, expressed motives and
goals, or inherited versus new ventures.
Chua et al. (1999) also argued that the
theoretical essence of a family business lies in
the vision of its dominant family members. The
vision must be to use the business for the better-
ment of the family potentially across more than
one generation. Birley (2001: 75) also con-
cluded that . . . owner/manager attitude is a
more productive approach to describing and
understanding the family business sector than
the more traditional methods of equity or mana-
gerial control. In this approach the vision (or
motives and goals) and behaviour of the firmare
differentiated from non-family businesses and
from businesses in which family involvement
makes no difference to its operations or future
development.
In this book we decided to take a very inclu-
sive approach in order to make it relevant to any
individual, couple or family involved in owning
and operating a business. Our definition is:
The Family Business consists of any business
venture owned and/or operated by an
individual, couple(s) or family.
Many family businesses in tourism and
hospitality are small, but size is not a factor in our
definition. Indeed, business venture applies to
micro-businesses such as B&Bestablishments or
other services that might not even possess legal
status or hold separate assets. Ownership is also
not a hard and fast criterion, as many people in
tourism and hospitality manage businesses that
they do not fully own, through franchise or lease
arrangements.
A Life Cycle Model for the
Family Business
Neubauer and Lank (1998: 4) observed that
family business studies are academically related
to the traditions of research on entrepreneur-
ship, owner-managed businesses, and small
and medium-sized businesses. Overlap of these
four traditions results in a complex interaction
of themes, issues and approaches. The
dominant and most unique family-business
topic is that of inter-generational ownership
transference. About 20% of the family business
literature is related to this issue of succession
(Sharma et al., 1996: 9).
The concept of a business life cycle is well
embedded in the family business literature, and
it is inherently linked to entrepreneurship. This is
because of the profound influence of founders in
establishing business goals and organizational
culture, and in determining the ultimate disposi-
tion of the business through sale or within-family
succession. Accordingly, any study of family
business must take into account the interactions
between family and business over time.
The three-dimensional developmental
model of family business by Gersick et al. (1997)
is a useful starting point for understanding family
business studies. It links three axes concerned
with ownership, business, and family (see
Fig. 1.1). The business develops through start-
up and expansion/formalization to maturity.
Ownership potentially evolves fromthe control-
ling founder through a sibling partnership to
a cousin consortium. Along the family axis
are four stages of family development: young
business family; children in the business;
working together; and ultimately succession
(or business termination). As noted by Neubauer
and Lank (1998), this 4 3 3 matrix results in
numerous possible combinations, and a given
family enterprise could be at more than one
stage on any of the three axes.
In the following sections we examine each
of the three axes and their interrelationships,
including references to pertinent discussions
later in the book. We also incorporate issues
identified in the cross-case analysis in Chapter
11, because the cases provide real-worldinsights
and elaborate upon the theoretical model.
The family axis
In this axis a core concern is with entrepreneur-
ship, foundation motives and goals. Differences
can be expected between individual founders
and married couples (with or without children)
when they establish a business, as families have
to be supported through the business and it
cannot be treated simply as a financial invest-
ment. When the family is placed ahead of the
business, sub-optimal business decisions might
Introduction 5
23
result. However, we have discovered that the
direct involvement of children in businesses is
not at all common, for a variety of reasons, and
therefore inheritance of businesses is an option
only for a small minority.
Our survey research and case studies reveal
that many founders of tourism and hospitality
businesses are motivated primarily by lifestyle
and locational preferences, sometimes with the
needs of children in mind but mostly with their
own preferences being paramount. Shared hob-
bies, leisure pursuits, values and lifestyles lead
numerous couples to enter tourismand hospital-
ity businesses and provide them with a measure
of cohesion. Strength can be derived for families
when work and play coincide in the business.
Ties to the land emerged as an important
theme in our research. In rural areas, and espe-
cially among farmers, holding on to the farm
is a matter of stewardship and its inheritance is
viewed as a legacy for the children. When the
farmers add a tourism or hospitality business it
can complicate the process of inheritance, as
business and land might have to be separated.
Nevertheless, it appears that in the industrialized
world the greatest number of businesses in this
industry are created by urbanites moving to rural
areas, and not by the farmers who have always
lived there.
Research data also reveal that some found-
ers were highly motivated by profit and growth
prospects, and we called these growth-oriented
entrepreneurs. They are somewhat different in
their values, attitudes, strategies and business
practices. For example, they tend to seek out
good investments, borrow more money, create
companies, and favour larger businesses like
hotels and restaurants, but they are also highly
motivated by lifestyle and locational prefer-
ences. In the conclusions we discuss the impor-
tance of these entrepreneurs for community and
destination development.
6 Chapter 1
Fig. 1.1. Family business developmental model (Gersick et al., 1997).
24
The family life cycle has a potentially
profound impact on the business. Bringing
children into the business will eventually lead to
ownership and control issues. If the children do
not want to take over the business, the founders
might start planning to sell it, but when and
under what circumstances will this fundamental
choice become clear?
Family-business interactions are of utmost
concern in the service sector, especially where
customers are invited into the home or on to the
family property. Some owners will be motivated
to maximize contacts, while others seek to
separate their home and business lives.
The roles of various family members can be
an important factor, including age and gender-
based differences. Female entrepreneurs are
numerous in this industry, partly owing to the
secondary nature of some of the businesses (for
example, B&B within the family home), and the
desire of many women to earn extra money,
further their childrens prospects, or gain some
independence. In some cultures the natural heirs
are expected to be males, while daughters face
an uncertain future in the family business. As
well, a division of labour based on traditional
gender roles (e.g. females cook and clean, males
do heavy work) might occur naturally without
discussion, while in other family businesses
a married couple will plan their roles. Several
respondents told us that flexibility is a key,
with everyone in the family expected to do
whatever is necessary and not worry about job
descriptions. Yet invariably it was the women
who did the financial work and bookkeeping!
Family members have to believe in the
business and show a sense of responsibility
toward it. The level of family support given to the
business, including money and labour, might be
critical in assuring its success. The foundation
stage requires strong support from all family
members, or (as shown in at least one of the
cases) all members must at least acquiesce. It
can certainly be hypothesized that division over
the foundation of a family business will lead to
disharmony and problems later.
A related theme is that of internal family
conflicts, specifically over goals and agreement
on solving problems, plus the issue of finding
equal worth within the family business or within
the family in general. Dispute identification and
resolution mechanisms are needed, and they
can be either informal or formal. Open and
honest relations were said to be important by
some of our married respondents. Responding
to adversity was also shown to be crucial, as
anything impacting on family or business affects
the entire family business system. Sibling rela-
tionships were found to be an important issue in
our case studies, particularly with regard to their
skills, interest in the family business, and level of
involvement with it.
Family culture interacts with organizational
culture at all levels. Where do the values, tradi-
tions and leadership come from, and are they
passed on through generations? Are entrepre-
neurship and innovation hereditary or deter-
mined by parental influence? In some families
there is a strong desire to create or perpetuate
a legacy of land, business or wealth, while in
others it is absent. Not only does family culture
permeate business decision-making but it sets an
emotional climate into which employees and
guests enter temporarily. According to Litz and
Kleysen (2002: 291) family culture needs more
study to develop a theory of the family firm. For
example, they asked, . . . what kinds of family
cultures support innovation and what cultures
frustrate it?
Broader cultural factors also affect the
family business. In some cultures entrepreneur-
ship is valued and in others it is atypical. Gender
roles and inheritance can be greatly impacted by
cultural norms.
The business axis
The three stages of business development (start-
up, expansion/formalization, maturity) relate to
professionalization of the owners and the busi-
ness, structure, growth, business operations,
ownerworker relations, and planning. One of
the central questions in family business studies
is that of control and stability versus a growth
orientation. In other words, do family and
lifestyle considerations take precedence over
growth?
Most family businesses in tourism and
hospitality never evolve beyond the foundation
stage. Farm families motivated to secure a little
extra income, or B&B operators interested in
meeting visitors, are unlikely and often unable to
Introduction 7
25
expand. Growth for the sake of growth, or to
maximize profit, is often not desired in family
firms. Rather, the owners need to carefully
weigh the merits of remaining debt-free versus
borrowing to expand, and the need to add value
to the business in order to generate an adequate
income.
Taking on paid staff or retaining profes-
sional managers are big issues for small family
businesses. Owner-operators in tourism and
hospitality often have to hire staff seasonally,
but fall back on family members during low-
demandperiods. Many want to hire managers or
lower-level staff to free up the owners time, but
costs and risks intervene.
Lack of professionalism is a frequent com-
plaint levelled at family businesses. In tourism
and hospitality, low entry barriers might attract
investors with little or no relevant training or
education. This can severely limit their potential
to grow or prosper. And if family firms grow
substantially, should they hire professional
managers or establish a board of directors
encompassing non-family members? These
questions clearly link to ownership and control.
Our research revealed a number of impor-
tant challenges for operating a family business in
this industry. There is a real need for excellent
customer service, including family branding
and cultivating networks among suppliers and
industry partners. Going it alone is difficult, so
alliances and cooperative efforts, particularly in
marketing, become essential. We observed an
over-dependence on word-of-mouth marketing,
which works well when demand is steady
or expanding, and a weakness in doing
segmentation to determine key target markets.
Human resource management is quite dif-
ferent in the family business. Most employees
are family members, and they are not always
paid a wage or salary. Children might work
informally in the business, leading to issues of
lifestyle, safety and training. When should they
become real, paid employees? Many respon-
dents told us they were hoping to be able to
afford to hire paid staff, in order to lift the burden
of work, but they either could not generate
sufficient and sustained income or they lacked
confidence or trust in non-family workers. Man-
aging part-time and casual staff is often required,
particularly because seasonality of demand is
suchanimportant limitingfactor inthis industry.
Financial management skills are essential
for the family business operator. Mostly it is
females who do this work, but where do their
skills come from? Formal training in marketing
and other management skills helps, but is not
always available.
The ownership axis
Some of the key questions along this axis
are: what ownership forms are used by family
businesses; who in the family is involved in
ownership; and how does that evolve and are
there gender differences? The model (Fig. 1.1)
suggests that siblings take over from founders
and ultimately a group of cousins might end up
in control of the business.
A central issue for all family businesses is
that of control. A family firm can be controlled
without total ownership, but many owners might
not want to take on partners or issue public
shares. Also, if founders are determined to per-
petuate family control they need to install legal
mechanisms to prevent family shares frombeing
sold externally, such as by establishing a family
trust. Many notable family businesses have
self-destructed through in-fighting over control
and/or asset disposition. Some of our respon-
dents also showed us that partnerships between
families can be quite problematic, with one
ultimately buying out the other as a solution
to disputes.
Financing, ownership and control are inter-
dependent. Equity in real estate, as with farms
and houses used in the business, might have
to be mortgaged to start and operate a tourism
and hospitality business. Property assets might
be high in paper value, but the business might
generate little in the way of cash flow. This leads
to difficulties in both paying family members a
proper income and allowing themto cash in on
the business or land value. A classic problem is
deciding how much income to put back into the
business as working capital, as opposed to taking
it as income or dividends. It appears that many
families plough their earnings back into the
business out of necessity or the desire togrowit.
Access to capital is a real challenge for
the family business owner, and so most rely on
their own or family support plus bank loans and
8 Chapter 1
26
mortgages. Under-capitalization limits profits
and growth potential, although this is common
to small businesses in general. Too much debt,
however, threatens the business and the familys
security. Most respondents in our surveys and
cases were debt-averse, except for the growth-
oriented entrepreneurs who look for and seize
financial opportunities. The ability to survive a
financial shock, such as a major downturn in
demand, is a matter of life and death for small,
family businesses. Many fail or consistently
under-perform, even in their owners opinions.
In many cases the land and/or business
might have to be sold outside the family because
owners need the money for their retirement.
But if owners are looking ahead to within-
family inheritance of the business, the form of
ownership might have to change. For example,
potential heirs can be brought legally into the
ownership before the founders retire. Problems
might arise if more than one potential successor
is involved in the business, especially where real
property is to be kept separate from business
assets.
We found that planning for succession was
not at all prevalent, and for many respondents
the question of inheritance within the family
was not even an issue it was not desired or
not practical. Those who do want their family
members to take over a business must plan for
it well in advance, especially by getting their
children involved at an early stage and giving
them increasingly responsible roles to play.
Many barriers have been identified, and so
it is when a successful succession takes place.
Equally, it is unusual to find mutigenerational
family businesses in tourism and hospitality.
Using the life cycle model
Table 1.1 summarizes much of the discussion
by Gersik et al. (1997) on challenges facing the
family business through the life cycle. For each
of the three axes of business, ownership and
family, some key challenges within each
hypothetical development stage are indicated.
What is particularly useful about this
life cycle approach is that it encourages inte-
grative thinking and research about the family
enterprise. The business and the family evolve
together, with different opportunities and issues
to face at each stage. Ownership might have to
adapt as children become involved, and ulti-
mately a decision has to be made about keeping
the business in the family (i.e. succession), selling
out, or dissolving it. Decision-points along one
axis affect elements in the others.
This model also clearly points out the need
for long-term, strategic thinking in the family
business. Do the founders want tocreate a family
legacy, or are children and their future in the
business even a consideration? The characteris-
tics of second- or third-generation family busi-
nesses are likely to be quite different from those
in the early years. Because research in a number
of countries has revealed a very high level
of start-ups, and a small number of family
businesses that have been inherited, less is
known about the long-standing family business
in tourism/hospitality.
Major themes in family business studies
Table 1.2 provides a broader summary of
the main family business themes. A key source
for this tabulation is the annotated bibliography
produced by Sharma et al. (1996). While all of
the main themes are discussed in this book,
as well as the key life cycle-related challenges
indicated earlier, they are not all treated equally
or in depth. This is partly due to insufficient
industry-specific material. Also, because the
bulk of family businesses in tourism and
hospitality never make it to the second or third
generation, there is less value in dwelling on
succession planning, sibling partnerships or
the cousin consortium stage.
A Framework for Understanding Family
Business in Tourism and Hospitality
While generic family business issues are applic-
able, it is also apparent from the research and
literature examined in this book that that the
tourism and hospitality industry embodies a
number of unique or especially important con-
siderations relative to the family business. Figure
1.2 gives a conceptual starting point for under-
standing the family business in this industry.
Introduction 9
27
The core of the framework has already been
discussed, consisting of the family vision and the
three interdependent axes of family, ownership
and business evolution. One can look for unique
aspects of vision (and related goals), and of the
evolution of ownership, family and business that
are found in no other industry. Researchers
can also try to identify particularly dominant
forces within the industry that affect the family
business.
The nature of the industry itself acts to
modify family business issues. We first address
the general business environment for tourism
and hospitality, then look at a number of specific
modifiers including the nature of the services
provided, hostguest relationships, cyclical
demand (especially seasonality), the influence of
the destination life cycle, and unique business
opportunities.
Tourism and hospitality is a truly global
industry, and the many settings in which tourism
and hospitality businesses exist act as modifiers
of the core elements. The setting is important
both in terms of location(urban, rural, resort and
peripheral are discussed) and with regard to
cultural influences and the level of economic
development.
The core
Why people get into and stay in tourism and
hospitality businesses is a crucial question,
particularly when the industry offers so many
challenges and often delivers a poor return on
investment. For a small minority there is little if
any family consideration, but most owners and
operators in the industry work with one or more
family members and many are preoccupied
with family matters. It is vital to understand their
motives, goals and family vision, particularly as
10 Chapter 1
Business Ownership Family
Start-up
Survival (market entry,

business planning,
financing)
Rational analysis versus

the dream
Expansion/formalization
Evolving the owner-

manager role and
professionalizing
the business
Strategic planning
Organizational systems
and policies
Cash management
Maturity
Strategic refocus
Management and
ownership commitment
Reinvestment
Controlling owner
Capitalization
Balancing unitary control with

input from key stakeholders
Choosing and ownership

structure for the next
generation
Sibling partnership
Developing a process for

shared control among
owners
Defining the role of

nonemployed owners
Retaining capital
Controlling the fractional

orientation of family branches
Cousin consortium
Managing the complexity of

the family and the stakeholder
group
Creating a family business

capital market
Young business family
Creating a workable marriage

enterprise
Making initial decisions about the

relationship between work and family
Working out relationships with the

extended family
Raising children
Entering the business
Managing the midlife transition
Separation and individuation of the

younger generation
Facilitating a good process for initial

career decisions
Working together
Fostering cross-generational
cooperation and communication
Encouraging productive conflict

management
Managing the three-generation

working together family
Passing the baton
Senior generation disengagement

from the business
Generational transfer of family

leadership
Table 1.1. Challenges through the family business stages of development (from Gersick et al., 1997).
28
Introduction 11
Fig. 1.2. A framework for family business theory and research in the tourism and hospitality industry.
Themes Specific topics within themes
Definitions
Uniqueness of family business
Life-cycle
Succession and inheritance
Governance
Strategic management
The founders
Family influence and dynamics
Culture and ethnicity
Professionalism
The family in society
Criteria for defining a family business
Types of family businesses
Their unique strengths (e.g. family branding; loyalty) and

weaknesses (e.g. nepotism; lack of growth)
Evolution of ownership, the family, and the business
Succession and estate planning
Barriers to involvement of children
Ownership, control and organizational structure
The owner/founder, CEO and Boards of Directors
Family trusts
Family vision (e.g. taking the long-term perspective)
Strategies and strategic planning
Motives and goals
Entrepreneurship
Leadership
Reluctance to pass the baton
Family culture (e.g. the legacy; innovation)
Sibling rivalry
Copreneurship (couples working together)
Gender roles
Intergenerational relationships
Nepotism
Variations in family business
Influences of culture or ethnicity
Working with employees
Transition to a professionally managed firm; professional advisers
Social and community responsibility
Environmental attitudes and practices
Social and family networking

Source: Sharma et al., 1996.
Table 1.2. Major themes in family business studies.
29
they might affect business viability and wider
economic and community development.
Our examination of core issues begins in
Chapter 2 with a detailed discussion of entre-
preneurship as it applies to the family business.
This theme also figures prominently in Chapter 3
where motives and goals of family business
owners in the industry are examined in detail,
and again in the case study chapters. Indeed,
consideration of family vision and business
goals permeates the book. A number of major
conclusions about the core vision are discussed
in this books conclusions. By way of preview,
the following paragraphs summarize the most
important points.
The need for autonomy drives many entre-
preneurs, and control-related motives and goals
are found to be very important among owners of
tourism and hospitality businesses. Autonomy
also leads many people specifically to service-
sector ventures where they can manage an
establishment in a hands-on fashion. Autonomy
and lifestyle motives are closely bound.
Lifestyle motives are a dominant reason for
setting up or purchasing a tourism or hospitality
business, particularly the desire to live in an
attractive (often rural) area. Related motives
include the desire to stay in or return to family
property, and the notion of creating or
perpetuating a family legacy. Resorts and other
recreational environments attract a lot of people
interested in pursuing their favourite sports,
while hospitality businesses afford operators
the opportunity to pursue life-long interests
in a creative environment (e.g. cooking, arts
and crafts, flowers, catering, decorating, events
production).
Some entrepreneurs and self-employed
persons have little choice. They either need
extra income (such as to support a farm) or the
economy does not provide good employment
alternatives. Migrants might find their new envi-
ronments to be hostile and self-employment
is therefore preferred, particularly where family
and ethnic networks can be of assistance.
Migrants returning home from abroad have
been found to be a source of investment in
tourism and hospitality, as they can bring back
new capital, skills and attitudes.
The profit-maximizing, growth-oriented
entrepreneur has been found to be a small
minority within family businesses in tourismand
hospitality. In most cases, the autonomy and
lifestyle goals prevail and the business is deliber-
ately kept small and manageable. Mobilizing the
growth-oriented entrepreneur should be a prior-
ity of economic and destination development
agencies, as should the task of identifying latent
entrepreneurship among those constrained by a
lack of capital or professional advice.
Where is the family vision in all this? First,
autonomy and lifestyle motives are a family-first
vision, making the business a means towards an
end. For a sub-set, the business offers the specific
type of family life the owners (typically couples
working together) are seeking. Either way, the
dominance of these types of family business
in tourism and hospitality, at least in highly
developed economies, ensures that the sector
will remain largely one of small and micro
businesses. Second, the family vision as related
to children and possible succession is revealed
to be of secondary importance and frequently
is not an issue at all. As will be demonstrated,
most family businesses in this industry do
not involve children at all, and very few get
inherited.
While motives and goals have been clearly
identified, less is known about evolutionary
processes within and among the three axes of
ownership, family and business. Most do not
involve children or make it to the next genera-
tion. Researchers will have to focus on selected
multi-generational family businesses to deter-
mine if they behave differently fromother family
businesses.
The business environment and
industry-specific modifiers
Tourism and hospitality are not always
considered together, nor are they universally
acknowledged to be an industry, but from the
perspective of family business studies they are
sufficiently similar to be studied together. For
the purposes of this book, the tourism and
hospitality industry is defined as consisting
of those businesses catering for travellers and
persons pursuing leisure activities, including
accommodation, catering (food and beverage
services), transport and tour services, attrac-
tions, activities and entertainment. As well,
12 Chapter 1
30
in many tourist destinations a large number
of retailers and arts and crafts manufacturers
cater primarily to visitors, so a broad range of
enterprises can be included. However, the full
extent to which tourism and hospitality services
resemble other service-sector family businesses
remains to be examined.
The business environment
Westhead and Cowling (1998: 44) discovered
through systematic research in the UK that
. . . family companies are over-represented
in services activities with low capital require-
ments. They are also over-represented in rural
areas, and especially in hotels and catering, and
are smaller in terms of sales and number of
employees.
Part of the explanation for this over-
representation of family businesses is the fact
that many types of tourism and hospitality busi-
ness are easy to enter and exit. Either they do not
require special skills, lengthy experience, or large
amounts of capital, or entrepreneurs think they
do not. Naivety and over-optimism seem to be
commonplace in small family businesses in these
sectors. One result is that many such businesses
fail to meet owners performance standards, or
fail outright.
Policy regarding economic development
generally favours tourism and hospitality invest-
ments, at least in designated areas typically
those peripheral to urban and economic centres.
Ironically, the industry is also highly regulated
and taxed. Consumer rights, health and safety,
environmental codes, land use planning and
much more impact on small and micro busi-
nesses disproportionately.
Tourismand hospitality services are experi-
ential, and therefore highly substitutable. Com-
petition is frequently intense, not only between
businesses offering virtually identical products
and services, but between all destinations. Large
corporations and franchise chains have tremen-
dous advantages, leaving family businesses to
find viable niche markets. Small businesses in
general can organize to achieve greater efficien-
cies in operations and a wider market reach, but
often there are not enough of them in an area to
make a real difference this way.
To some, the tourism/hospitality business
environment is typically challenging and often
hostile to the family business. It is a tribute to
individual and family vision, hard work and
persistence that the sector endures and that
many families actually prosper.
Nature of the service
Tourism and hospitality are highly experiential
in nature. In fact, the family can be an
important part of that service, especially when
the business brings customers into the familys
home or land. Wanhill (1997) noted that fami-
lies can be part of the tourism experience, and
can help to increase customer satisfaction by
providing good local information to visitors.
When the family becomes part of the attraction
it can be said that family branding is occurring,
and this could become a powerful competitive
advantage. Researchers and teachers in tourism
and hospitality have not paid much attention
to family branding, but this book contains
an excellent case and a pertinent discussion
of issues.
Hostguest relations
Many tourismand hospitality businesses require
a high degree of hostguest contact, often to the
point where family and work become blurred.
The owner or owners family members directly
provide guests with accommodation, hospital-
ity, entertainment, information and inter-
pretation, food, or activities. Regardless of their
growth orientation, families must usually add
value to their business to earn enough money
to hire staff so they can gain relief from
long hours and constantly being on call. For
example, Long and Edgell (1997: 73) observed
in their case study of a couple running a
campground: The owners did note the value of
being able to leave the property from time to
time and the importance of having dependable
employees to look after the operation when
they are away.
Contact between hosts and guests is some-
times a motive for establishing the business,
but also a potential source of stress through
loss of privacy, handling many demands and
complaints, and time pressures. Some of the
businesses require a high degree of technical
expertise, but many are rooted in people skills
like friendliness, helpfulness and integrity.
Introduction 13
31
Cyclical demand and seasonality
One of the hallmarks of tourism is cyclical
demand (Murphy, 1985). Many destinations
and tourism settings are particularly hard hit
by seasonal and weekend peaks, followed by
low demand periods. In the Western Australian
sample (Getz and Carlsen, 2000), 61% agreed
or strongly agreed that their business was highly
seasonal. Another 17% were uncertain, which
possibly reflects their newness.
The main problems presented by seasonal-
ity relate to cash flow and overall profitability,
even threatening their viability (Baum, 1998),
but it does offer families a lull during which pur-
suit of family and lifestyle goals can dominate.
In fact, Brown (1987) concluded that taking a
long, seasonal break from work was a motivator
for some family business owners, and this fact
impeded growth potential.
Can small businesses survive the potential
cash-flow problems? Can families adjust to the
peaks and troughs in terms of workload? Is staff
available to help out? These represent very seri-
ous challenges to the family business owner. A
study of seasonality in the Danish island of Born-
holm (Lundtorp et al., 1999) revealed some of
the pressures that are generated on family busi-
nesses. They found that owners relied heavily on
summer student workers to meet peak demand,
and often worked 100 hours a week themselves
over a 1620 week season. Some took another
job in the off-season, while others had to sustain
the business (e.g. repairs, marketing).
Seasonality of demand is such a global
phenomenon, and usually so predictable, that
owners and potential investors in tourism and
hospitality have to carefully weigh the implica-
tions for business viability and decide whether or
not they can handle (or even prefer) the seasonal
lifestyle swings. A number of strategies can be
employed by family businesses to either counter
cyclical demand or adapt to it, as discussed in
Chapter 4. All of the options have impacts both
on family life and business prospects.
Destination life cycle
The destination life cycle model (Butler,
1980) incorporates an evolution of business
investment and ownership with implications for
owner-operators and resident versus in-migrant
owners. Din (1992) specifically hypothesized
that local entrepreneurs dominate in the
early stages of development, while Shaw
and Williams (1997) suggest that it cannot be
assumed that residents have access to capital or
are entrepreneurial enough to take advantage
of new opportunities. Cooper (1997: 87), com-
menting on the decline of British coastal resorts,
said that many resorts suffer from a lack
of investment in the accommodation sector.
This is due to a combination of seasonality, low
occupancy patterns and the characteristics of
ownership in the sector, all of which conspire to
drive down profitability.
It remains questionable whether or not any
stage in the hypothetical life cycle of destinations
presents better opportunities for family business,
for residents versus in-migrants, or small versus
large companies. A connection between family
business and resort decline has been hypothe-
sizedandshouldbe testedina variety of settings.
Unique business opportunities
Tourism and hospitality present a number of
unique business opportunities that appear to
have specific appeal to individual entrepreneurs
and to families. People interested in outdoor
recreation can start touring or outfitting com-
panies, or provide facilities. Those with rural
property can establish farmstays, campgrounds,
and B&B houses, all of which have their own
niche markets. Opportunities also exist to meet
tourists needs and desire for fresh produce,
antiques, or other merchandise with a unique
rural flavour. There is virtually an unlimited
scope for creativity, hands-on operations, and
provision of new types of services and service
environments.
Setting modifiers: location
Although there is a spectrum of settings to
consider in geographical terms, most attention
within the tourism literature has been given to
rural, resort and peripheral settings. Not much
has been said about small and family businesses
in urban locations.
14 Chapter 1
32
Urban settings
Urban areas should present numerous opportu-
nities for family businesses, but as discovered by
Westhead and Cowling (1998) in the UK, they
are actually over-represented in rural areas.
Mostly there are no comparative data available
on urban versus other business environments
for tourism and hospitality enterprises, so it
remains a topic in need of study.
The urban environment certainly presents
numerous opportunities for family businesses in
retailing, catering, accommodation and other
services, because of large local and travel mar-
kets to drawupon and presumably less seasonal-
ity of demand. As most cities have areas or high-
way strips where motels and restaurants flourish,
it can be hypothesized that family businesses will
find niche markets and be spatially concentrated
in the urban setting. A contrary hypothesis
might be that large corporations and chains will
dominate urban markets to the point where
smaller, family businesses are not competitive.
Rural areas
Many researchers have written about farm
and rural tourism, and it has generally been
concluded (e.g. Evans and Ilbury, 1992; Page
and Getz, 1997) that there has been substantial
growth in this industry in recent decades. Part
of the explanation for expansion is that of sub-
sidies to farmers for diversification, and partly
it is attributable to the lifestyle and locational
choices of numerous entrepreneurs.
Komppula (2000) noted that there are
about 3600 rural tourism enterprises in Finland,
of which three-quarters were originally farms.
However, tourism is a major source of income
for only about 15% of these mostly family-
owned enterprises. They are characteristically
part-time owner-operators possessing limited
financial resources, low skills and little commit-
ment to development. The businesses them-
selves consist of cottages and farm buildings for
rent, B&B accommodation, farm visits, group
catering, holiday villages and recreational
activities.
In Denmark about 10% of farms have
developed some form of tourism service
(Hjalager, 1996). These include farm vacations
with access to animals and social contacts with
the owners, or merely accommodation. They are
usually established to supplement farm income
and apparently perform poorly in financial
terms.
Numerous issues pertaining to tourism and
hospitality businesses in the rural environment
have been identified and discussed by Page and
Getz (in The Business of Rural Tourism, 1997).
Some of these are especially pertinent to family
businesses, although there has not been any
systematic research aimed at making that
connection. First, dependency on the natural
resource base is high, and often an essential part
of the tourism experience. Accordingly there
is a need for sustainable development and
operations in all businesses, and an appropriate
ethic among business operators.
People interested in the environment
(and in outdoor recreation) might therefore
make better prospects for rural tourism and
hospitality investments.
Rural areas are frequently remote from
markets and have accessibility problems due to
distance or poor infrastructure. In such areas
businesses can be highly dispersed, increasing
their dependence on intermediaries to connect
supply with demand, and on destination organi-
zations or industry partnerships for marketing
efforts. Some families living in remote areas
might desire the new revenue and social inter-
actions that a tourism business can bring, while
others do seek out remoter areas for lifestyle
reasons and use tourism as a means to survive
there. Remoteness and/or poor accessibility
have serious business implications (from extra
costs to increased risks of theft and fire) and
also impact directly on the family in terms of
relationships, shopping, leisure opportunities,
schooling, and other essential services. This
environment most likely attracts and sustains
certain types of personalities, or families with
unique backgrounds, and repels others.
Another feature of rural tourism and
hospitality businesses identified by Page and
Getz (1997) is that of financing difficulties. Many
are self-financed, in part to retain control, and
partly because of the difficulty in obtaining loans
or external investors. This can expose the family
business to high financial risks, and can easily
limit their ability to grow or adapt.
Introduction 15
33
Peripheral areas
Peripherality in the European Union context
is based on distance from the economic
centre, and implies some or all of the following
characteristics (from Nilsson et al., 2004):
Sparsely populated, and often

depopulating.
Dependent on primary resource extraction

or farming; a small manufacturing sector.
Relatively isolated communities (particu-

larly on islands, along coastlines and in
rural areas).
Costly and/or difficult accessibility.
Extreme seasonality.
Potentially high impacts on communities

and the ecosystem.
The tourism industry is often of great
economic importance in peripheral areas, given
the lack of viable alternatives. European Union
policies have favoured tourism development
(Wanhill, 1997) as an organic solution, with the
assumption that farms can add facilities and
fishing communities can adapt to recreational
activities. However, peripheral tourism typically
suffers fromhigh costs, lowaccessibility, a lack of
infrastructure or quality facilities, and a depend-
ence on intermediaries. The local population
might not have the skills, capital or inclination to
develop tourism, and a dependence on govern-
ment aid might actually stifle entrepreneurship
(Morrison, 1998). Marketing and planning
functions for tourism are also likely to be
under-developed in these regions.
Morrison (1998: 195) defined positives
and weaknesses for the small tourism and
hospitality firm in peripheral areas. In addition
to the challenges mentioned earlier, these firms
(in most cases they are family businesses)
face scarce human and constrained financial
resources, declining traditional markets (such as
the long, seaside holiday in hotels andpensions),
and a fragmented industry. On the positive side,
small businesses can attempt to capitalize on the
appeal of nature and solitude, cultural authentic-
ity, personalized service, and where available,
public-sector support. As well, Haber and
Lerner (2002) suggestedthat tourismventures in
peripheral areas might be able to take advantage
of under-exploited factors of production, such as
existing farm buildings.
The special issues applying to tourism
in peripheral areas have been examined in
some detail (Brown and Hall, 2000). Island
tourism studies, which often embodies
peripherality issues, has also produced a
number of specific books and special issues
of academic journals. Although family-related
issues are frequently mentioned in these studies,
notably gender roles and the prominence of
lifestyle entrepreneurs, nothing systematic has
been reported on family business themes in
peripheral tourism.
Resorts
Resorts are self-contained settings for vacations
or other overnight trip types. By definition they
are visitor-oriented and focus on services of all
kinds for meeting visitor needs and preferences.
They range from small ecolodges in natural
areas to fully-planned, integrated resort com-
plexes and major cities. Resort environments
should be the richest of all for family businesses
in tourism and hospitality, mainly because of
the wide range of required services and a huge
scope for niche marketing. But are they? Later
in this book comparative data are presented
from research on family businesses in two resort
environments an island, coastal resort area
(Bornholm, Denmark) and a mountain resort
(Canmore, Canada). Large, urban resorts have
not been studied from the family business
perspective, nor have remote eco-resorts.
The nature of the resort attraction base
might play a major role in determining family
business opportunities (e.g. small tour compa-
nies) and of course the markets such as a
preference for B&B or budget accommodation.
It might also be that the resort life cycle favours
family businesses at the early stage of develop-
ment, before chains and large corporations
make substantial inroads.
The setting: level of economic development
Highly developed, industrialized economies
can be expected to generate more and different
opportunities and challenges for entrepreneurs
and family business. Cultural factors will also
vary along the development continuum. One
16 Chapter 1
34
probable difference is the dominance of a life-
style orientation among tourism and hospitality
owners in developed economies, whereas in
poorer economies it can be expected that
people have less money and less choice, giving
rise to a family business by necessity.
In tourist-receiving societies in less-
developed nations, according to Harrison
(1992), structures inherited from the colonial
period might act against entrepreneurial activity
by residents, or restrict them to specific sectors.
In-migrants (often retiring in a new location)
or returning migrants often dominate the entre-
preneurial class. Local elites are often favoured
in developing business links with international
tourism firms, and these elites might stem from
racial or ethnic differences.
Research by Haber and Lerner (2002)
revealed that the inherent attractiveness of
the location (within Israels Negev region) was
more important than institutional support in
explaining business profits, but organizational
and managerial variables were the most impor-
tant variables. They also examined various types
of support that could be utilized in remote
areas and lesser-developed economies,
including business incubators, financial and
informational/advisory support.
Resorts often occupy a special place in
developing economies. If the resort is a fully self-
contained enclave, it might generate few if any
local business opportunities. Larger, integrated
resort complexes present many opportunities for
both grey-market self-employment (e.g. drugs,
the sex trade) and local investment in service
enterprises.
The setting: culture
Family business in tourism and hospitality will
also be linked to culture, although this theme
has only been touched upon in the research
literature. The coreperiphery model was used
by Britton (1981) to explain the development of
entrepreneurial enclaves in developing nations,
and these hypothetically present similar oppor-
tunities for family business as those existing
in fully industrialized economies. Lundgrens
(1973) evolutionary model suggests increasing
entrepreneurial opportunities for residents of
the hinterland as a resort or tourist enclave
develops.
Culture influences entrepreneurship in
general and family business specifically, as some
cultures are more open to personal and family
business initiatives, and among some cultures
continuation of a family business is either
shunned or encouraged. For example, Dondo
and Ngumo (1998) said that Kenya does not
have a culture strongly supportive of entrepre-
neurship it is too conformist, with collective
rather than individualistic values predominating.
Also, Kenyans tend to live for the moment, lack
independence, and are reluctant to accept
responsibility. Much of this stems from tribal
traditions.
Family business exists within aboriginal
or indigenous communities, but it has not
been examined in any systematic manner. The
tourism and hospitality literature contains many
examples of indigenous or aboriginal tourism
development, but few deal with individual
entrepreneurship or family matters. Getz and
Jamiesons (1997) case study of one native
entrepreneur in Alberta, Canada, demonstrated
special concerns of ownership (i.e. who owns
the cultural product?) and the potentially wide
extent of family involvement in any business
venture. When community ownership of
resources prevails, entrepreneurship and family
business take on different characteristics.
Notzke (1999) reported on one married
aboriginal couple in the Canadian Arctic who
were firmly rooted in a way of life tied to the
land, but who provided a tourism product for
part of the year. This combination maximized
the familys ability to maintain their way of
life. Many tourists want this type of authentic
cultural experience, especially as it provides
opportunities for learnig about everyday life in
aboriginal communities and families.
In Western Samoa, Fairbairn-Dunlop
(1994) concluded that customary land owner-
ship results in the necessity that tourismventures
be family or village initiatives. Samoan woman
have built successful businesses out of an initial
small-scale activity because the endurance of
customs has meant that women have received
an education, are used to taking initiatives and
accepting the consequences, and can use the
traditional family system for the benefit of
the family and the business.
Introduction 17
35
Frideres (1988) argued that capitalismruns
counter to the interests of indigenous people,
and that development must be based on
community control rather than individual
enterprise, but there are many examples of
both collective and individual native enterprise
in tourism and hospitality, so it remains an issue
for research and debate.
Chapter Summary
Issues specific to the family business in tourism
and hospitality have long been subsumed under
the more general headings of small business
and entrepreneurship. What makes the family
business unique and worthy of special interest is
not merely its almost global significance in terms
of numbers of enterprises, nor its typically small
size. Rather, it is the vision of owners to start
a business to serve personal and family
needs, potentially across generations, that sets
them apart. Often they are based on lifestyle
and locational preferences, plus the desire for
autonomy, and do not seek or are incapable of
supporting growth and profit maximization.
A greater understanding of the family busi-
ness and its environment will not only aid in the
betterment of this important industry sector, but
will provide benefit to economic and community
development, and to destination competitive-
ness. They are so important, particularly in
rural, resort and peripheral areas, that ignoring
their special goals and needs can potentially
be very damaging to industry and community
sustainability.
This introductory chapter defines family
business and utilizes a well-known life cycle
model (Gersik et al., 1997) to establish a
framework for examining the inter-dependent
evolutionary processes of ownership, family and
business. Major themes in the generic family
business literature are also summarized, and
these are revisited in the concluding chapter in
the context of identifying research needs specific
to tourism and hospitality.
An industry-specific framework was devel-
oped for understanding the family business,
starting with the generic core of family vision
and the three evolutionary processes of family,
business and ownership. It has been argued that
the business environment and industry-specific
modifiers make family business somewhat
unique in tourism and hospitality. The most
important modifiers are likely to be the nature of
the service environment, including hostguest
interactions that are frequently home-based, the
owners and family as part of the experience,
cyclical demand (i.e. seasonality), the destina-
tion life cycle, and unique business opportunities
such as those stemming from farm operations
or personal leisure interests and skills. Setting
modifiers have also been explored in detail,
beginning with the differences imposed by a
peripheral, rural, resort or urban location for the
family business. The level of economic activity in
the environment will have an impact on family
business, as will cultural factors.
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Hospitality Research 3(1), 4770.
Ward, J. and Aronoff, C. (1990) To sell or not to sell.
Nations Business 78(1), 6364.
Westhead, P. and Cowling, M. (1998) Family
firm research: the need for a methodological
rethink. Entrepreneurship Theory and Practice
autumn, 3156.
Wortman, M. (1995) Critical issues in family business:
an international perspective of practice and
research. In: Proceedings of the 40th Interna-
tional Council for Small Business Conference,
Sydney. NCP Printing, University of Newcastle,
Newcastle, Australia.
20 Chapter 1
38
2
Entrepreneurship and Family Business
Introduction
The aim of this chapter is to recognize family
business as a distinct form of entrepreneurship
and to delve into the more submerged and
under-researched variables of importance to
enhancing understanding and knowledge.
Furthermore, Goffee (1996) cautions against
simply attaching family as a prefix without fully
pursuing and understanding what distinguishes
such enterprises from presumably non-family
ones. Thus, the chapter makes the connection
between entrepreneurship, small and family
business, focusing on the unique entrepreneur-
ial opportunities, challenges and issues that are
inherent in the tourism and hospitality industry.
The contribution of key industry-specific and
setting modifiers as identified in Chapter 1 is
explored within the framework of a model
that investigates the extent to which they act
as filters either to intensify or dilute the entre-
preneurial process resulting in consequential
entrepreneurial socio-economic outcomes. This
three-level filter model is presented in Fig. 2.1
and emphasizes the cyclical nature of the pro-
cess as negative and/or positive consequences
feed through the system, promoting or inhibit-
ing future entrepreneurial activity within a
host society. Conclusions are drawn that
highlight the unique factors associated with
entrepreneurship as related to tourism and hos-
pitality family businesses, how they influence
the nature and evolution of such enterprises,
and competitive and policy implications. The
Fig. 2.1 model is applied to structure the
content of this chapter.
Entrepreneurial Process
The entrepreneurial process represents the level
one filter and is an interaction of a complex,
multi-dimensional and dynamic set of factors
and circumstances. These arise from the
characteristics and attitudes of individual
entrepreneurs who are motivated to take part
in entrepreneurship as a consequence of their
genetic make-up and social development within
their host communitys culture. Discussion sur-
rounding entrepreneurship, culture and entre-
preneurs is now explored and understanding
developed as to how they combine into an
entrepreneurial process.
Entrepreneurship
As with many other academic fields of study,
there exists little consensus as to a universally
accepted approach to the definition of entrepre-
neurship. For example, according to Timmons
(1994) it is about innovating and building
something of value from practically nothing. It is
the process of creating or seizing an opportu-
nity, and pursuing it regardless of the resources
currently personally controlled. Hisrich and
Drnovsek (2002: 175) provide a further useful
39
approach in defining entrepreneurship as: the
creation and management of new businesses,
small businesses and family businesses, and the
characteristics and special problems of entre-
preneurs. Hence, in these definitions the roots
of family business may be taken to originate in
the essence of entrepreneurship, with a focus on
understanding the interaction of entrepreneur
and organizational contexts, structure, behav-
iour and resources (Craig and Lindsay, 2002).
From a European perspective, entre-
preneurship has its roots in classical economic
literature as embodied in the seminal research
by authors such as R. Cantillon (16801734),
J.B. Say (17671832) and J. Schumpeter
(18831950). For example, Schumpeter (1934)
approaches it from a normative perspective,
arguing that entrepreneurs seek business objec-
tives such as profit and growth. However, in the
contemporary world this uni-dimensional, and
economically directed, approach is becoming to
be regarded as overly simplistic (Greenbank,
2001). It fails to account for non-economic
determinants of entrepreneurship including
ideology, legitimacy, social mobility and psycho-
logical factors (McKay, 2001). This is particularly
significant within the context of family entre-
preneurship, which Cromie et al. (1999) suggest
differs fromeconomic entrepreneurship in that it
incorporates a domestic dimension.
Consequently, over recent decades the way
of thinking about the process of entrepreneur-
ship has broadened considerably. While it is
recognized as being at the heart of an economic
development task it is now acknowledged to be
driven by the motivations of individuals and
families, who are seeking to satisfy their unique
social and economic personal goals (Fass and
22 Chapter 2
Fig. 2.1. Family business entrepreneurship filter model.
40
Scothorne, 1990). Drucker (1986) describes this
endeavour as translating into an effort to create
purposeful, focused change in a businesss eco-
nomic or social potential, plus the application
of distinct entrepreneurial management and
strategies. This indicates that entrepreneurship
has: its foundations in person and intuition, and
society and culture. It is much more holistic than
simply an economic function, and represents
a composite of material and immaterial, prag-
matism and idealism (Morrison, 2000a: 59).
Furthermore, interpretations of what represents
entrepreneurship are likely to vary cross-
nationally according to the distinctive patterning
of social values and norms of behaviour
(Morrison, 1998a). This highlights the influence
of culture in the entrepreneurial process.
Culture
It is tempting to be seduced by the notion that
entrepreneurs concerned with family business
will behave in a homogenous manner the world
over, robotically conforming to theories and
insights generated within the worlds of the
academic and policy maker. For example, in
such a knowledgeable world triggers or cues
that result in entrepreneurial behaviour could
be isolated and mechanically triggered by
government officials concerned with tourism
and hospitality development to stimulate the
process and beneficial economic and social out-
comes of entrepreneurship. However, we live in
a much more human and unpredictable world
awash with rich individual, family and national
cultural diversity that cascades a colourful
mosaic of cues and behaviours. These often
defy academic and policy-maker capture and
sense-making. This was alluded to in Chapter 1
relative to the impact of industry and setting-
specific modifiers to family business attitudes,
values and activities, and a similar stance can
be adopted relative to deepening understand-
ing of the role of a host culture in the filtering of
what may be considered as a pure, undiluted
process of entrepreneurship.
Tayeb presents a definitionof culture andits
scope as:
a set of historically evolved learned values, atti-
tudes and meanings shared by the members of
a given community that influence the material
and non-material way of life. Members of the
community learn these shared characteristics
through different stages of socialization
processes of their lives in institutions, such as
family, religion, formal education, and society
as a whole.
(Tayeb, 1988: 42)
Thus, societies can be distinguished from
each other by the differences in the shared
meanings they expect and attribute to their
environment as is evident in the oft cited work
of Hofstede (1991). However, Tayeb (1988)
and Van der Horst (1996) astutely point out
that none of us are slaves to the culture in which
we live. There will be those persons who are
moved to deviate or escape from accepted
cultural norms.
The combination of the terms entre-
preneurial and culture has become popular,
widely accepted internationally, and is an
expression of an attitude towards commerce at a
business level. It can be described as one in
which a positive social attitude towards personal
enterprise is prevalent, enabling and supporting
entrepreneurial activity. The existence of an
entrepreneurial culture represents societal sup-
port for an enterprising spirit that will flourish
within certain communities in response to uncer-
tainty and competition (Kirzner, 1979). Gilder
(1971: 258) describes this spirit in inspirational
terms as it: wells up from the wisdom of ages
andthe history (of the West) andinfuses the most
modern of technological adventures. Thus, any
explanation of what triggers the release of the
spirit of enterprise leading to the initiation of
entrepreneurship must work from an under-
standing of the collectives generally accepted as
characteristic of certain societies, and respect
and acknowledge the individuality and unique-
ness of members of such societies who are
personally motivated to act entrepreneurially
(Morrison, 1998b).
The following provide some illustrative
examples of entrepreneurial cultural norms and
diversity.
Gender: strong ideological support for

traditional familial labour divisions and
societal presumptions of the appropriate
roles for both sexes means that deviations
from the norms are challenging. For exam-
ple, an emphasis on the role of women
in homemaking in many societies may
Entrepreneurship and Family Business 23
41
mean that the provision of hospitality ser-
vices is deemed to be socially acceptable
as a female-type business. Consequently,
there is a concentration of women in
domestic and personal services-related
endeavours, such as, providing B&B for
tourists and business travellers (Blackburn,
1999; Cameron and Massey, 1999; Carter
et al., 2001).
Politics: in Russia there has not been a

history of an entrepreneurial culture. The
first law on small business and entrepre-
neurship was not adopted until 1991.
Some individuals managed to overcome
the traditional complex of inferiority and
lack of creativity and initiative and have
created new ventures that are prepared to
compete in a market-oriented economy
(Hisrich and Grachev, 1995).
Economic: in Tajikistan (former USSR)

the economic environment presents little
opportunity for legitimate entrepreneur-
ship. Many economic activities are still
illegal, and therefore conducted in a covert
way in order to avoid punitive measures
from law-enforcing authorities. This repre-
sents a parallel, underground, officially
fictitious economy to that of the formal.
It offers a different interpretation of an
entrepreneurial class that lives in the
shadows in some societies (Dana, 2001).
Religion: many of the Kenyan people are

God-fearing and when it is preached from
the church pulpits that it is easier for a
camel to pass through the eye of a needle
than for a rich man to get into heaven it
has a profound impact on the societal
attitude towards entrepreneurship. Some
members of the population might see it
as representing selfish capitalism. This
attitude is prevalent in a society which
prioritises support for the community and
extended family, with wealth being shared
with kith and kin first, leaving little left
over for investment in enterprises (Dondo
and Ngumo, 1998).
These examples help understanding of the ways
in which culture may filter the entrepreneurial
process, either intensifying or diluting it. It has
its roots in the dominant politics, history, reli-
gion, ideologies and economies. This includes
the notion of a potential entrepreneurs evalua-
tion of social legitimacy, desirability and
feasibility influenced by cultural values, eco-
nomic factors, and the relationship between the
entrepreneur and their host environment
(Jones, 2000). Thus, having a thorough under-
standing of cultural values, motivations, and
aspirations of various cultural sub-groups within
populations is critical to increasing the knowl-
edge base about factors that contribute to indi-
viduals being influenced to become an entre-
preneur (Collins, 2002).
Entrepreneurs
Pearce (1980) succinctly depicts the process of
entrepreneurship as a metaphor in comparing
entrepreneurs with bees to describe what they
do. He believes that, in most respects, entrepre-
neurs are ordinary human beings, seeking to
do good for themselves in terms of material
gain and social status. In the process they are
unwitting catalysts, as with bees whose strictly
private activities are the first cause of almost
everything else, as their honey-seeking serves to
pollinate. In this respect, entrepreneurs can be
regarded as first among equals in the process of
wealth creation. In creating their own wealth,
entrepreneurs also stimulate wealth creation
opportunities for others, and with the potential
to bring about positive social consequences in
the wider society.
The key to unlocking the process of
entrepreneurship would appear to be in the
power of these entrepreneurs. Over centuries
their endeavours have significantly contributed
to change and growth in the business world.
They are also credited with most of the material
progress in society (Hurley, 1999). Within the
tourismandhospitality industry, for example, we
can make mention of the likes of Walt Disney,
Conrad Hilton and Thomas Cook, all of whom
have radically innovated within their respective
sectors, significantly redefining the nature of
products, services and markets that have con-
tributed to the growth of the tourism and hospi-
tality industry over the decades. In this respect,
Day (2000) likens the entrepreneurial process to
bush fires. Just as they are natural occurrences
that raze forests to the ground, and in the very
24 Chapter 2
42
process engender new life, so do entrepreneurs
transform industry and society through their
energized and radiating endeavour.
Within academic circles debate abounds as
to whether these entrepreneurs are proactive or
reactive individuals in the process of entrepre-
neurship. According to Kuratko and Hodgetts
(1998: 97): every person has the potential and
free choice to pursue a career as an entrepre-
neur. However, this underplays the complex
and multidimensional interaction of entrepre-
neurial behaviour cues that are embedded in
the contemporary world of the individual, soci-
ety and economy. These are not necessarily
driven by factors such as maximization of a
return on investment, or exploitation of a market
opportunity. Instead, they may be prompted
by the following range of examples of critical
incidents that have acted as entrepreneurial
behaviour cues:
Buy themselves and/or family members a

job (Harper, 1984).
Avoid unemployment and respond to eco-

nomic necessity (Cameron and Massey,
1999).
Earn enough money to allow them to leave

the community to search for a better life
(Dahles and Bras, 1999).
Be a solution to adversity (Dahles, 1998).
Pursue intrinsic goals such as independ-

ence, gaining control over life, and a flex-
ible lifestyle (Middleton and Clarke, 2001).
Provide an alternative economic means to

overcome blocked upward career mobility
experienced within the corporate arena
(Smith, 2000).
Table 2.1 summarizes a range of examples of
entrepreneurial behaviour cues. Clearly, they
represent a complex and somewhat ethereal
weave of positive and negative social and
economic factors, and those of a psychological
nature that may be categorized either as nega-
tive or positive dependent on interpretative
stance (Morrison, 2001).
As an illustration of entrepreneurial behav-
iour cues, Collins (2002) provides an historic
example of immigrant entrepreneurs to Australia
seeking an upwardtransformationof social class,
rather than continuity of what they had experi-
enced in their country of origin. Some came to
Australia as refugees from peasant or unskilled
backgrounds, others were educated profession-
als, and there were undocumented immigrants
who lived in a shadow world. Discriminatory
legislation was introduced in 1896 that confined
non-Anglo-Celtic business people to the periph-
ery of the business system. Hence, the likes of
the Irish Catholics, Lebanese and Jews were
restricted in their access to business opportuni-
ties, and faced block employment mobility. This
created a movement of the Chinese and many
other immigrants such as Italians, Greeks and
Lebanese into restaurants, not as a preferred
choice but as a consequence of limited options
(Glezer, 1988). By the mid-1980s Chinese cafes
were an established feature of the Australian
suburban and country town landscape. They
were the vanguard of encroaching Australian
Positive Negative
Social

Role of the family and intergenerational
role models
Conducive culture
Supportive networks
Political/religious displacement
Political unrest
Discrimination
Unhappy with position in society

Economic

Move towards services
Reversal of highly vertically integrated

company structures
Phenomenon of dot.com business
Corporate downsizing and redundancy
Dissatisfaction with/blocked
employment opportunities
Discriminatory legislation
No other way to make money

Psychological

Entrepreneurial aspirations of independence, wealth, need to achieve, social
mobility, etc.
Sources: Scase and Goffee, 1989; Storey, 1994; Hurley, 1999; Morrison et al., 1999; Morrison, 2000b;
Collins, 2002.
Table 2.1. Entrepreneurial behaviour cues.
43
cultural diversity as Chinese restaurants pro-
vided a culinary diversity in food that did not
exist at that time. Thus, it can be seen from this
illustration that many of these immigrants used
entrepreneurship as a vehicle to break through
social and/or economic negative cues of a class
or ethnic ceiling, satisfying their psychological
needs, and as a consequence transformed
industry and society.
Naffziger et al. (1994) contribute to under-
standing by supplying a useful analytical model
that approaches entrepreneurial behaviour cues
as an experiential process, and suggest that
the initial decision to be an entrepreneur is the
result of the interaction of a range of factors as
has been presented in Table 2.1. Their model
includes the individuals personal characteristics,
personal environment, personal goal set, the rel-
evant business environment, and the existence
of a viable business idea. This model is attractive
in that it combines wider environmental forces
with the intrinsic motivations and social context
of the entrepreneur, and Fig. 2.2 summarizes the
findings fromone application to a study of entre-
preneurs (Morrison, 2001). Such an approach
recognizes that entrepreneurs do not emerge
from a vacuum, but that the entrepreneurial
process is influenced by the social and business
systems within which they are located and con-
ditioned (Carson et al., 1995). It is only when
the social and business system-derived cues con-
verge that entrepreneurship will be activated.
It is therefore understandable that existing
and emergent entrepreneurs navigate through
their respective social and business systems to
present themselves in many different guises, as
indicated in Table 2.2. Consequently, there is
evolving recognition of the need for understand-
ing of different variants, behaviours and dynam-
ics of entrepreneurs (Hurley, 1999; Department
26 Chapter 2
Fig. 2.2. Model of entrepreneurial cues. (Source: adapted from Morrison, 2001: 78.)
44
A4751 - Getz - 044.prn
of Trade and Industry, 2001). For example, Kets
de Vries (1996) proposes that many are, in
effect, misfits who need to create their own envi-
ronment. They do not want to be at the mercy of
others, and are motivated to move away from
controlling influences. Furthermore, they have
difficulties with authority figures and structured
situations even after they have moved away
from controlling influences. For example, this
is often manifested within the tourism and
hospitality industry in the form of the rejection
of the urban and corporate lifestyle for one that
is rural, with relative organizational autonomy
achieved through being self-employed.
What is particularly significant within the
context of family business is the permeation of
family throughout all the entrepreneur guises
with the exception of serial. For example, it
would appear that: it is a flexible means to
integrate work and family responsibilities; the
family acts as a business asset through the vol-
untary contribution of work; traditional family
domestic gender roles transfer to the workplace;
and the pursuit and continuity of the family unit
and lifestyle is facilitated. Furthermore, it is clear
that these typologies of entrepreneur guises
should not be regarded as sterile, static and
divorced from each other, as many overlap and
will change and alternate according to respective
family and business lifecycles. These ten guises
(Table 2.2) are now discussed in more detail.
Copreneur: many family businesses are

established by spouses or life partners,
Guise Description Example
Copreneur Marital and business partners managing
work and family responsibilities more
effectively
Husband and wife contribute
complementary skills and resources to the
management of a winery visitor attraction
Ethnic Entrepreneurs drawn from ethnic minority
groups often operating in ethnic niche
markets
Chinese, Greek, Italian restaurants in
Europe, Australia and North America
Family Meshing together social and business
systems
Multi-generations servicing the tourism
market as a means of generating family
employment to maintain the family unit
Female Using business as a vehicle for
greater flexibility in managing family
responsibilities
Homestay accommodation that enables the
combination of commercial, domestic and
child-caring responsibilities
Intrapreneur A family member, other than the
founding-entrepreneur, adopts and applies
entrepreneurial characteristics within the
existing business
Second-generation family member working
within a traditional hotel adopts a business
re-engineering strategy transforming it into
serviced accommodation
Lifestyle Primary concern is to provide a sufficient
and comfortable living to maintain a
selected way of life
A ski instructor operates the business for a
4-month season to earn enough to live all
year round in a mountain retreat
Micro Employing less than ten persons
deliberately constraining size
Extension of a family home to offer B&B
accommodation
Portfolio Concurrently own more than one business
that may bring additional benefits for the
entrepreneur and enterprise
Farm diversification into tourism-related
businesses such as accommodation and
sports activity
Serial Entrepreneur will own a consecutive
series of businesses with entry and exit
coinciding with market opportunities
With ICT redefining travel marketing a
traditional high street retailer may move into
travel consultancy, then a dot.com business
Social Entrepreneur combines commercial skills
with social aims and objectives
Rurally located tour guides that are
primarily concerned with environmental
preservation and community values
Sources: Scase and Goffee, 1989; Greenbank, 2000; Carter et al., 2001; Carter, 2001.
Table 2.2. Entrepreneur guises.
45
these copreneurs seeking self-employment
in order to achieve greater control over
their lives, allowing the flexibility to inte-
grate work and family responsibilities more
effectively than would be possible within
a corporate environment. They tend to
adhere to traditional sex role orientations
at home and in the business, with womens
traditional family roles as primary caregiver
and housekeeper reinforced in the work-
place. For example, this is often the case
in the provision and servicing of tourism
accommodation (Smith, 2000; McKay,
2001).
Ethnic: niche markets are often the seed-

bed of ethnic entrepreneurship, such as
within the independent restaurant sector,
which is established as a popular activity
for ethnic minority businesses inter-
nationally. Accounts of ethnic minorities
in business have generated controversy
on a number of issues, including: different
patterns of self-employment among ethnic
groups; relative importance of cultural
resources including the support of immedi-
ate and extended family; constraining
nature of the market environment; and the
relationship between ethnic enterprise
business and support agencies (Ram et al.,
2000; Collins, 2002).
Family: the significant involvement of

family in the ownership and management
of small businesses has been established,
and within the tourism and hospitality
industry specifically this is even more
pronounced. Examples of this type of
entrepreneurship are prevalent within
rural, peripheral and resort locations
with families often involved in a portfolio
of economic activities combining the likes
of farming, homestay accommodation and
rural tourism experiences (Cromie et al.,
1999; Carter et al., 2002).
Female: over the centuries many

women have run home-based businesses,
frequently attributed to the need to accom-
modate work and child-rearing roles simul-
taneously, and this emphasizes the impor-
tance of the family and life cycle context.
Statistics on female-owned firms are sorely
lacking and estimates often exclude the
entrepreneurial contributions that women
make to family businesses, which are
masked by co-ownership. These busi-
nesses tend to cluster in the lower financial
turnover categories, use informal sources
of finance, and operate in traditionally
female sectors of the economy such as
hotels and restaurants (Hurley, 1999;
Orhan and Scott, 2001; Carter et al., 2002;
Collins, 2002).
Intrapreneur: is a person who acts

entrepreneurially within the existing family
business in terms of re-engineering organi-
zational and economic development. They
are concerned with business diversifica-
tion, innovativeness, self-renewal and pro-
activeness, often essential to sustain the
family business over generations. Impor-
tant factors contributing to the emergence
of such behaviour are the structural and
relational aspects within the environment
that may nurture or stifle family members
(Carrier, 1996; Antoncic and Hisrich,
2001).
Lifestyle: this represents an extremely

elusive and qualitative concept, deter-
mined by the values and expectations
that the owner-managers largely select for
themselves. Their motivations and aspira-
tions relate to the quality of life and place,
and economic activity that is bounded by
seasonality and profit satisfying rather
than conventional measures of financial
success, such as growth of sales turnover or
number of employees (King et al., 1998;
Kuratko and Hodgetts, 1998).
Micro: the majority of family businesses

can be classed as micro, which is officially
defined as employing less than ten per-
sons. In the reality of the tourism and
hospitality industry micro dominates and
frequently consists of only one self-
employed owner-operator or copreneurs.
While there may be market opportunities
to grow the business, this is frequently not
pursued as protection of a specifically
selected lifestyle may dominate over ratio-
nal economic goals (Lynch, 1999).
Portfolio: or multiple business ownership

has been associated with a range of
benefits for the individual and enterprise.
For example, it can be evidenced in
agricultural literature relative to farm
28 Chapter 2
46
A4751 - Getz - 046.prn
diversification into tourism, and within
urban tourism, entrepreneurs use self-
employment in other industry sectors such
as financial services to augment the mea-
gre returns from tourist accommodation in
low season. These portfolio activities can
serve as a means to cross-subsidize eco-
nomic activities in order to maintain the
continuity of the family as a unit (Carter,
2001; Morrison and Teixeira, 2002).
Serial: these entrepreneurs lack an

emotional attachment to one business or
another. They display strong characteristics
associated with market opportunity spot-
ting, speed of action, and versatility to
move in and out of business as windows
of open-and-shut opportunity. This is not
a guise of entrepreneur that is prevalent
within family businesses that tend to mesh
the family emotional system more closely
to that of the business. It tends to lend itself
to dynamic market places, such as has
been seen in recent years with the develop-
ment of the Internet which has revolution-
ized travel distribution processes (Day,
2000; Carter, 2001).
Social: may be considered as active in

the third sector or social economy, and
can be distinguished in that these entrepre-
neurs combine trading viability with social
aims and ownership. The businesses tend
to be niche- and locality-focused. Their
activities are financed by a combination of
earned income from the sale of goods and
services (market resources), government
subsidies (non-market resources) and
voluntary family employment (non-
monetary resources). Evidence of this type
of entrepreneurship in the tourism and
hospitality industry is provided in the form
of lifestyle operators, and those concerned
with sustainability of the natural environ-
ment, who contribute something to com-
munities that have recognized social value
(Thompson et al., 2000; Smallbone et al.,
2001; Shaw et al., 2002).
Kets de Vries encapsulates the essence of
these entrepreneurs as:
Many people have ideas, but very few have the
stamina to turn their ideas into action; and as
some aspiring entrepreneurs have discovered
the hard way, a vision without action is nothing
more than an hallucination. To be successful
entrepreneurs must have both vision and drive.
Kets de Vries (1996: 24)
Within the context of family business, vision
and drive tends to be directed at the betterment
and sustainability of family first, with the busi-
ness element being a means to that end.
Industry Specific Modifiers
The tourism and hospitality industry specific
modifiers act as a second-level filter in the fam-
ily business entrepreneurial model presented in
Fig. 2.1. This industry sector presents itself to
entrepreneurs as a potential site for them
to apply the entrepreneurial process, rich in
many unique opportunities that particularly
hold appeal to those attached to the land, rural
and natural environments. They will evaluate
the feasibility and desirability of entry into this
industry sector against opportunities elsewhere,
and a persuasive factor is frequently the rela-
tively low capital entry requirements of small
service sector operations such as homestays
and restaurants. What is unique about the
tourism and hospitality industry is that it has
held consistently solid appeal to those individu-
als seeking to combine lifestyle, domestic and
commercial activity. Furthermore, as Blackburn
(1999) notes, although the family has ceased to
be a productive unit in the market economy,
it remains one in the domestic economy, such
as represented by the tourism and hospitality
sectors. For example, within the context of the
Scottish tourism industry, it is of significance to
note that the majority of tourism accommoda-
tion operations are small and often family-
run (Lockyer and Morrison, 1999). Many have
been lured by the appeal of, often romanticized,
notions of the quality of lifestyle that may be
experienced. This reflects a naivety as to the
24 hours-a-day, 7 days-a-week service orienta-
tion that may place pressure on the founding-
entrepreneur and family relationships as family
domestic space is shared with commercial
customers. Certainly, a significant feature of
tourism in Scotland has been inward migration
to selected communities with tourism and hos-
pitality market potential by people from outside
47
of the area looking to enter into business. They
are often prompted in their choice by initial
familiarity with the location through touristic
visits. For example, the islands of Mull, Skye
and Arran located off the west coast of Scotland
are home to communities where a substantial
number of in-comer lifestyle families settled
during the latter part of the 20th century
(Morrison et al., 2001).
This strong lifestyle business entry
motivation is reflected in the traditional image
presented of small tourism and hospitality
businesses. For many, particularly in rural
and peripheral locations, maintenance and
protection of a certain lifestyle will be prioritized
over commercial focus on profit-maximization
(Sherwood et al., 2000; Thomas et al., 2000).
In this respect, maximization of derived family-
value may well be the driving goal rather than
that of business-value. For example, Morrison
et al. (2001) summarize the following range
of lifestyle entrepreneur business entry
motivations:
Meet people and act in a host capacity

while still maintaining a relatively
unencumbered lifestyle.
Live in a place that has natural scenic

beauty but may be remote and hence few
outside visitors.
Inhabit accommodation and/or location

that might be otherwise outside of the
comfortable envelope of the proprietors
income.
Move away from the perceived rat race of

modern urban living while having built up
sufficient assets/capital in previous living
to move to a peripheral location without
significant debt burden; and/or
Operate a commercial concern, which

does not demand 12-month attention but
benefits from the effects of seasonality with
a 68 month annual closed season.
However, the range of possible business
entry motivations derived from entrepreneurial
behaviour cues (Table 2.1) is endless and any
attempt at fashioning a comprehensive list would
be a futile exercise. Simplistically they may be
categories such as opportunity entrepreneur-
ship taking advantage of a market opportu-
nity, or necessity entrepreneurship pursuing
the best and often only option available (Ram,
1994; Neck et al., 2001). Furthermore, it could
be argued that within the context of the tourism
and hospitality industry these categories could
be expanded to include lifestyle entrepreneur-
ship and social entrepreneurship.
Table 2.3 summarizes the factors that
Morrison (2002) identifiedtoexplain the reasons
why the small family business endures within the
tourism and hospitality industry and those that
may endanger certain members of the popula-
tion in the future. This information should be
viewed as a continuum with enduring at one
end and endangered at the other, as it is not an
either/or situation and there will undoubtedly be
differing degrees in between.
Thus, it can be observed that the entre-
preneurial process will filter through the industry
setting as the entrepreneurs in their various
guises assess the feasibility and desirability of it
30 Chapter 2
Enduring Endangering
Located in sectors and peripheral geographic and/or
economic locations that are unattractive to corporate
investment
Located in sites of corporate activity, financial
investment and new product development
Providing an authentic tourism and hospitality
experience, with clearly differentiated quality
products and services to niche markets
Floating product and service within the market
place that is undifferentiated and vulnerable to
the competitive practices of corporate groups
Lifestyle attraction, low barriers to entry and
sustenance of operation despite human and
financial resource poverty
Economic climate and general external forces
severe, discouraging lifestyle indulgence and
unmasking resource deficiencies
Contribution to sustainable regional development
and adding value to the economy, society and the
environment
Policy makers lack awareness of potential
contributions, and neglect to provide
appropriate support infrastructure
Table 2.3. Enduring and endangering factors.
48
as a site for the social and economic investment.
Evaluatory criteria may include:
Economic feasibility of combining domes-

tic and commercial domains.
Aesthetic appeal of a particular geographic

location.
Compatibility with an aspired lifestyle.
Potential for psychological gratification

through the likes of hosting and visitor
satisfaction; and/or
Fulfilment of social and moral obligations

such as family cohesion, provision of an
inheritance for future generations, sustain-
ing the natural environment or adding
value to local communities.
The foregoing provides an explanation of why
the tourismand hospitality industry continues to
be dominated by the small rural business model
in most developed and developing countries
(Baum, 1999; Middleton and Clarke, 2001).
This is evident in the UK, where the Department
of Trade and Industry (2001) indicated that
99.8% of hotel and restaurant businesses
employed less than 50 persons in 2000. Thus,
what is important is not their contribution to
employment, but that their collective critical
mass provides the bulk of the essentially local
ambience and quality of visitor experiences at
rural and peripheral destinations, on which the
future growth of overseas and domestic visits
depends (Middleton and Clarke, 2001). For
guests such businesses can add value socially in
that they may reflect the special values of place
and host encounters allowing a glimpse into
local life and traditions.
Table 2.4summarizes the negative andpos-
itive features associated with small hospitality
businesses, which have been identified (Morri-
son, 2002). The positive features emphasize
the value of industry-specific, community and
regional contributions that may be achievable,
while the negatives illuminate the tensions and
contradictions that are involved in the realization
of potential. The ease of entry and exit may
be regarded as a positive or negative feature
according to consequences and perspectives.
This summary contributes to the development of
a deeper understanding of the contemporary
positioning of small businesses within the
tourism and hospitality industry.
Setting modifiers
Should the entrepreneurial motivation survive
through the second-level filter of the tourism
and hospitality industry setting, attention then
turns to the organizational setting modifiers
of the small family tourism and hospitality
business. This represents the third- and final-
level filter in the family business entrepre-
neurial model (Fig. 2.1), and can be analysed
relative to the components of organizational
structure, behaviour and resources. This
approach employs a trinity of definitional
approaches to address holistically the multi-
dimensional milieu of entrepreneurship and
family business that will ultimately impact on
entrepreneurial socio-economic outcomes. This
approach corresponds to the Gersick et al.
(1997) model referred to in Chapter 1 that
encourages integrative thinking and research
about family business, as decisions within one
sphere will impact elements in others.
Positive

Valuable element in a tourism destination infrastructure
Respond to market characteristics and demand satisfaction
Sustainable economic, social and environmental contribution
Instrumental to regional development

Negative

Often ignored in national and regional policy development
Operate out with the hospitality industry
Defy economic logic in their manner of operation
Fragmented sector difficult to co-ordinate and control
Variability and inconsistencies of product quality and visitor

experience
Positive/negative

Low barriers to entry and exit
Table 2.4. Negative and positive features of small hospitality businesses.
49
Organizational Modifiers
Kets de Vries (1996) logically points out that
every family business starts somewhere, usually
with a founder-entrepreneur who has not only a
business concept but also the will and persis-
tence to bring that concept to fruition. He calls
these founder-entrepreneurs societal misfits.
They are instrumental in structuring the organi-
zation, and have a profound influence on it.
Carter et al. (2002) found that the majority of
small tourism and hospitality businesses take
the form of partnership shared among spouses,
immediate and extended family members.
Family members are active in the businesses,
taking on roles such as general management,
supervision, accounting, cleaning and catering.
In many cases it is a husband-and-wife team, or
copreneurs, that make all the decisions and deal
with most of the work, assisted by very few staff,
many of whom are part-time. This reflects one
of the paramount organizing principles in many
societies, that of gender, and just as it is a
dominant factor in families, it is also reflected in
the organizational structure of family business
(Omar and Davidson, 2001). This leads Goffee
and Scase (1995) to refer to it as an entrepre-
neurial family that functions quite differently
from the normal Western pattern of business,
for the inextricable linkage of social and
business systems means that they cannot be
divorced from each other. This will inevitably
influence the entrepreneurial process as family
values and emotional attachments interact and
compete with commercial market-driven values
(Cromie et al., 1999).
Other than ownership, organizational
structure also manifests itself through the charac-
teristic of smallness, which can be regarded as
either an asset or a constraint dependent on
perspective. Family businesses in the tourism
and hospitality industry rarely growto any signif-
icant size and the majority remain as micro. The
question why this is so has vexed academics and
policy makers over the decades. Explanation
can work from a number of different angles as
was identified by Morrison and Teixeira (2002)
as follows:
Emotional attachment associated with the

physical space, in that it is often also the
family home, constrains business growth.
Concern about market potential and any

resultant loss of the distinctive differentiat-
ing features associated with smallness.
Managerial capacity is sufficient to cope

with existing size, but growth would bring
with it the need to employ from without the
family circle, which is not perceived as
desirable.
Financial poverty: while it is relatively

easy to raise additional funds for expan-
sion, securing an adequate return on
investment to pay back loans was
problematic.
Thus, in combination these physical, human
and financially derived factors stunt growth and
protect the status quo of smallness. At best this
can be likened to a bonsai tree, which presents
itself as a specialized, quality niche product
whose roots are deliberately and expertly
tended to ensure the retention of its defining
features. At worst it is a mass market common
house plant that has gone to seed and hidden
under the soil its roots are stealthily strangling
and killing it. Thus, it can be summarized that:
The heart of the organizational structure

contains the founding-entrepreneur, the
entrepreneurial family, and their respective
family and business value sets, within
which social and economic goals are often
contested.
Emotional attachment to predominately

family values may dilute the entrepre-
neurial process, deliberately preserving the
micro.
Alternatively, the family structure could

provide the business with a significant
entrepreneurial advantage that the corpo-
rate organizations may find extremely
difficult to mimic.
Organizational behaviour
Brockhaus (1994) defines family business in
terms of organizational behavioural character-
istics, in that it is represents an enterprise in
which family members influence the direction
of the business through the exercise of kinship
ties, ownership rights or management roles.
This definitional approach is supported by
32 Chapter 2
50
Chua et al. (1999). A quote from Kets de
Vries succinctly summarizes the spirit and
challenge of organizational behaviour in family
businesses:
Founder-entrepreneurs and owners of family
firms and their employees are like partners in a
dance: the experience can be very exhilarating,
but the dancers sometimes fall over each
others feet . . . making the organizational
dance gracefully is the real challenge for all
concerned.
(Kets de Vries, 1996: 56)
Goffee (1996) cautions against assuming
that all family businesses will exhibit similar
behavioural characteristics. Differences will
derive from varying structures, cultures and
life cycle stages of entrepreneurial families. This
was apparent in a study of small family-owned
tourismaccommodation businesses in Scotland,
where Morrison and Teixeira (2002) analysed
organizational behaviour through the applica-
tion of a three-category framework. This focused
on the founding-entrepreneur, business and
external environment, and resulted in the sets of
factors presented in Table 2.5. In concert these
interact and impact on the entrepreneurial pro-
cess withinthe organizational context as it moves
through the various life cycle stages of entrepre-
neurial families and their respective businesses.
Thus, from Table 2.4 it can be observed
howentrepreneurial activities may be further fil-
tered through the interacting range of factors to
influence the entrepreneurial process. These can
lead to a heavy reliance on family members for
managerial talent that may restrict choice and
intrapreneurial capabilities. Cromie et al. (1997)
suggest that this is not a problem. Provided they
are trained in technical and managerial areas
they can assist in business development. Fur-
thermore, as Kets de Vries (1993) argues, early
immersionin the business as a childmay provide
training opportunities for family members. How-
ever, these positive perspectives are challenged
by the findings in Table 2.5. They reveal that:
Founding
entrepreneur
Middle-aged, limited formal education or experience directly related to the

hospitality industry
Low professional and financial barriers to sector entry
Perceptions of a simple business to operate
Managerial constraints, limited capabilities and constrained resources to solve

gaps in managerial competencies
Business entry decision driven by personal and family-related considerations to

the subordination of business
Meshing of personal and business goals may lead to profit satisficing, and/or an
unhealthy work/life balance
Limited ambitions and vision, and protection of lifestyle over business expansion
Business

Family involvement may lead to sub-optimal efficiencies and masked financial
viability
Simple organizational structures mean that decision-making is embodied in a

few individuals, and management resources are strained
Involvement in multiple income generation activities may detract from

commitment to the small business
Failure to attract and manage quality, skilled human resources could impact
negatively on the quality of the product and service
Size negates economies of scale, has consequences for financial viability, is

physically contained, and deliberately constrained for reasons of product and
service differentiation and lifestyle protectionism
External
environment
Industry restructuring to favour the economics of the larger corporation
Weak power position, vulnerable to the micro and macro economic and political
environments and natural disasters
Dependent on local human resources that are deficient in satisfying needs
General high dependencies on externalities

Source: Morrison and Teixeira (2002).
Table 2.5. Factors influencing organizational behaviour.
51
Low entry barriers attract entrepreneurs

with limited formal education or experi-
ence directly relating to the industry sector.
There is a significant deficit in management

competencies and resources.
The material and non-material needs of

the family tend to dictate the amount of
income to which involved family members
aspire.
Businesses operate to sub-optimal levels in

terms of profit and growth.
Organizational resources
Habbershon and Williams (1999) adopt a
resource-based definitional approach in
describing family business resources as the
familiness of a given business. More
specifically, familiness is defined as the unique
bundle of resources a particular business has
because of the systems interaction between the
family, its individual members and the business.
This provides a unified systems perspective
on family business performance capabilities
and entrepreneurial advantage. Working from
a Chinese perspective, for example, Yu (2001)
highlights the fact that the cultural and famili-
ness of resources facilitate competitive strategies
that are non-contestable by Westerners. Such a
definitional approach has advantages in that it
may focus attention on the largely hidden con-
tribution of family members, and in particular
female entrepreneurs, in enterprise manage-
ment and development (Carter et al., 2001).
From an organizational resource perspec-
tive a family businesss founding and ongoing
goals can act as both a bonus and a constraint to
business. They are instrumental in the making
and shaping of the businesss resources (Craig
andLindsay, 2002), anda long-termperspective
can provide a distinct entrepreneurial resource
advantage (Cameron and Massey, 1999). For
example, Habbershon and Williams (1999)
summarize elements of such a resource base as
follows:
A unique working environment which

fosters a family-oriented workplace and
inspires greater employee care and loyalty.
More flexible work practices.
Family members are more productive than

non-family employees.
A shared family language allows more

effective communication.
Family relationships generate unusual

motivation, cement loyalties, and increase
trust.
Transaction costs are lowered.
Decision-making is informal and efficient.

This emphasizes the significant resource
base that an entrepreneurial family has the
potential to contribute to a business. Moreover, it
has been recognized within the context of the
tourism and hospitality industry that it can be a
valuable part of the tourismexperience as family
and customers interact. The significance of this
critical asset is intensified within the context of
ethnic entrepreneurship. For example, relative
toChinese immigrant entrepreneurs inAustralia,
Collins (2002) found that both the immediate
family, along with the extended ethnic family,
represent resources critical to entrepreneurial
success. Such resources may include moral and
financial support, business advice, access to
valuable networks and represent an accumula-
tion of social capital that could enhance entre-
preneurial knowledge, skills and capabilities
(Dana, 2001).
A further significant resource is variously
described as the deployment of family members
in voluntary, unpaid, or unwaged employ-
ment, and is particularly prevalent in domestic
gender division of labour as is often evidenced
in the tourism and hospitality industry. This
use of family labour is a traditional, important
and differentiating feature of the entrepreneurial
family (Gorton, 2000). Indeed, according to
Scase and Goffee (1989) in the personal service
sectors many enterprises, such as small hotels,
are only profitable because the overheads are
subsidizedby unpaid services of family members
andby the use of domestic facilities toaccommo-
date business. Thus, in addition, to the apprecia-
tion of land and buildings and annual profits,
income is derived in kind, because the family
lives on the premises, and often off the land, as
well as any salaries they may pay themselves. As
a result it is often difficult to differentiate clearly
between profit as return on investment and
the emoluments of the owners in the form of
cash and non-cash benefits (Medlik, 1994). This
34 Chapter 2
52
A4751 - Getz - 052.prn
suggests that many family businesses operate as
social entrepreneurs in a form of domestic-
economy as opposed to a market-economy
and may represent an economically efficient
mode of enterprise with special entrepreneurial
advantages (Blackburn, 1999). This represents a
vital differentiating feature of family businesses
in comparison to corporations. Thus, it can be
summarized that organizational resources are
composed of economic, market and socially
derived capital. This presents a different
interpretation from that of strict economic
entrepreneurship.
Entrepreneurial Socio-economic
Outcomes
Finally, after its journey through the three-level
filtering system, the entrepreneurial process
reaches the resultant socio-economic outcomes
as evidenced within the tourism and hospitality
industry. It has been a complex and challenging
process and it is perhaps understandable that
some of the intensity of the entrepreneurship
may have somewhat diminished.
The actual contribution to socio-economic
outcomes of small family tourismand hospitality
businesses is difficult to gauge accurately
(Kovassy and Hutton, 2001), however, Middle-
tonandClarke (2001) summarize it ineconomic,
social and environmental terms in the following
manner. They are embedded in local communi-
ties, so the money earned tends to be retained
within the community and they provide a vital
source of employment. For the guests, they can
add value socially in that they may reflect the
special values of place and host encounters,
allowing a glimpse into local life. In expressing
the local character of place, entrepreneurs
could be more committed than, for example,
a corporate group, to sustaining the natural
environment for a range of moral, lifestyle and
commercial motivations. Furthermore, there is
evidence that some family business entrepre-
neurs act as cultural and/or heritage custodians
driven by their commitment to preserving and
perpetuating traditions for the next generations
of their family. This corresponds with the social
entrepreneur guise identified in Table 2.2. Thus,
small family businesses have the potential to
contribute social, economic and environmental
outcomes to rural and peripheral communities in
which they are located by:
Offering sustainable solutions to economic

and social challenges in terms of providing
employment and services, purchasing
goods and services from local suppliers
and traders.
Preserving the natural environment and

heritage in which they locate.
Attracting inward investment from those

persons seeking a lifestyle change.
Adding value to the social fabric of the

community as a whole.
However, Middleton and Clarke counter
these positive outcomes in stating that:
At the leading edge, they embody the entre-
preneurial spirit and vitality of places . . . at
the trailing edge many exist on the fringes of
the industry damaging the environment of the
destinations in which they are located, reducing
visitor satisfaction and perceived quality of the
overall visitor experience.
(Middleton and Clarke, 2001: 41)
Chapter Summary
Figure 2.3 summarizes key points identified
in this chapter relative to the entrepreneurial
process. It suggests that understanding of the
process, as it interplays with family business, is
best served by reference to the cultural, social
and business systems within which entrepre-
neurs are embedded. These combine to filter
the perceptions and behaviours of entrepre-
neurs as to the potential to achieve their aspired
material and/or social gain. At full intensity this
process will result in outcomes that radically
infuse and energize economies, society and
industries, creating long-term and sustainable
benefits for society as a whole. However, this
proposition needs to be treated carefully as it
contains an implicit bias towards an idealist
vision of entrepreneurship, which may assume
that all intentions are morally sound and
socially responsible. As has been observed,
entrepreneurship by its very nature is con-
cerned with the initiation of change that may
challenge, and perhaps destroy, the established
order and the complacency of traditional social
53
and economic systems. Consequently, it would
be delusory to accept that all outcomes from
the process of entrepreneurship will be positive,
even if it is hoped that any, in Schumpeterian
(1934) terms, destruction will be creative.
Figure 2.4 consolidates the key findings
relative to the tourism and hospitality industry
setting, organizational structure, behaviour and
resources, and industry-specific entrepreneurial
outcomes. Here it is clearly apparent that the
intensity of the entrepreneurial process has been
significantly diluted by the time it has flowed
through all three levels of filters (Fig. 2.1). The
nexus between industry setting and family-
business organizational modifiers results in an
interactionto produce entrepreneurial outcomes
of small family entrepreneurial businesses that
may lack the energetic intensity depicted in
Fig. 2.3.
From the content of this chapter explana-
tions can be drawn that reflect the complex and
humanistic dimensions associated with family
entrepreneurship in the tourism and hospitality
industry, such as:
Certain impediments to the entrepre-

neurial process may be self-inflicted, con-
sciously accepted and maintained by the
entrepreneurs, while others are out of their
control.
Evaluation of what constitutes entre-

preneurship will vary dependent on the
socio-economic reference frame used
by various stakeholders including entre-
preneurs, policy-makers and academics.
For many entrepreneurs the commercial

pursuit of enterprise is a necessary suste-
nance for, but subordinated to, the pursuit
of socially driven lifestyle aspirations.
The tourism and hospitality industry is

characterized by relatively low profes-
sional, skill and financial barriers to entry,
that readily accommodate a family/lifestyle
business model, and as such it is perceived
as an attractive mode for those individuals
seeking life change.
It is concluded that entrepreneurship
represents an extremely broad concept that
masks the wide range of variants and degrees
of intensity that hide under its umbrella term.
Within the tourism and hospitality industry,
in their own distinct way, small entrepreneurial
families do act as catalysts, stimulating rural
and peripheral social communities and local
economies. In doing so, they often engender
36 Chapter 2
Fig. 2.3. Entrepreneurial process.
54
A4751 - Getz - 054.prn
new life that enables the sustenance and
perpetuation of environments, crafts, heritage
and traditions that might otherwise disappear.
However, the existence and creation of mainly
microbusinesses is unlikely to transformindustry
sectors and societies in the same way as the
examples given of Walt Disney, Conrad Hilton
and Thomas Cook. Nevertheless, small family
tourism and hospitality businesses can provide
a valuable contribution in embodying an entre-
preneurial spirit and vitality that has the potential
to contribute significantly to the vitality of place
and authenticity of tourism experience.
Thus, it shouldfollowthat regional develop-
ment agencies concerned with the stabilization,
regeneration and sustainability of rural and
peripheral areas would be well advised to adopt
policies deliberately designed to attract and hold
families to conducive tourismactivity zones. Fur-
thermore, systems are necessary to encourage
the active engagement of all stakeholders in the
tourismdestinationinfrastructure to connect and
work in partnership regardless of size, or public
or private sector origins. For as Middleton and
Clarke (2001: 463) emphasize: Ultimately and
ironically, the long-run future of big businesses
in mature markets is heavily dependent on the
service delivery capabilities of small hospitality
businesses over which they have no control.
This signifies the potential for a healthy symbi-
otic relationshipbetweensmall andlarge tourism
and hospitality businesses.
Fig. 2.4. Tourism and hospitality family entrepreneurship.
55
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40 Chapter 2
58
3
Starting the Family Business
Introduction
Start-up is the most critical stage in the family
business not growth, and not succession. This
is because many founders have little interest in
growing, and succession or inheritance is not an
issue. The future of the business will always be
in doubt, with many strategic options available,
but the course of most family businesses is set
as soon as the founders make the decision to
purchase or create an enterprise. In tourism
and hospitality the vast majority, from intent or
necessity, will always remain small, hands-on
operations.
In this chapter the critical issues of motiva-
tion and goals are examined first, particularly the
contrasts inherent in growth and profit-oriented
entrepreneurship versus the more prevalent
lifestyle and autonomy motivations. Research
data from Australia, Canada and Denmark are
analysed to examine start-up motives and goals
in depth. Later in the book (see Chapter 5),
data from these same research projects are
used to examine family-related and business-
development goals, successionplans and related
issues.
The third section of this chapter discusses
important antecedents to family business,
including the influences of education, experi-
ence and training. Tourism and hospitality
businesses are often easy to enter and many
owners lack directly relevant training or experi-
ence. On the other hand, previous work in the
industry, or exposure through ones upbringing
in a family business, might motivate some
people to establish their own business. Culture
and economic conditions are alsoantecedents to
be considered.
Business planning is then considered. The
careful preparation and execution of a business
plan is considered to be a major indicator of
potential business success, and is certainly
associated with achieving growth. Yet a majority
of family business founders appear deliberately
to neglect the business plan, either out of
ignorance or as a reflection of their predominant
lifestyle and autonomy motives. Included in this
section is an outline of what the plan should
include, with emphasis on several family-related
issues.
Ownership, organization and governance
are covered last in this chapter. Ownership forms
and business structure are usually set at the
time of business start-up, or absorbed through
purchase. Many families prefer uncomplicated
forms including single and joint ownership, while
various forms of partnership are preferred by
others. The profit- and growth-oriented entre-
preneur is more likely to purchase or establish
a company because of its greater potential to
acquire external funds fromlenders or investors,
and to restrict owners liability in the case of fail-
ure. Of particular interest to the family business is
the option of including professionals in manag-
ing the business, or at least in a board of direc-
tors. Parallel to business governance should be
policies and procedures for family management,
including a family council and charter.
59
Motivations and Goals
Sharma et al. (1996: 9) observed that family
business goals are likely to be quite different
from the firm-value maximization goal assumed
for the publicly traded and professionally man-
aged firms, but there have been few attempts to
identify the imputed differences. At the heart of
this issue is whether family business owners will
place family concerns over business success
or growth, and what impact this has on the
business (and by implication, the industry and
destination).
Singer and Donahu (1992) touched on
this issue by identifying two distinct types: the
family-centred business, where the business is a
way of life, and the business-centred family, in
whichbusiness is a means of livelihood. File et al.
(1994) also categorizedfamily businesses, distin-
guishing between those which were uninvolved
in issues of family dynamics, those balancing
family and business needs, some which had
family concerns as their primary goal, and others
which were most concerned with adapting to
changing conditions.
As noted by Westhead (1997), economic
theory postulates that the decision to establish a
business should be based on an assessment of
the best alternative use of the entrepreneurs
time, but family business owners are distin-
guished by providing employment for family
members of the management team and by
ensuring independent ownership of the
business. Dunn (1995) found that it was not
uncommon for family businesses to accept lower
returns or longer paybacks on their investments,
or to sustain a lifestyle, rather than to maximize
profits or personal revenue. Gersick et al. (1997)
concluded that businesses in the start-up stage
were characterized by informal organizational
structure, owner-manager control and having a
single product. When it is also a family business
they are more likely to be associated with
personal, family or lifestyle dreams than
with objective business projections.
Enough evidence has been published
regarding motives and goals in the tourism
and hospitality industry to conclude that there
exist a multiplicity of economic, social and
personal reasons. In the following section
evidence from a number of diverse sources
is presented, then more detailed data and
analysis are examined from Australia, Canada
and Denmark.
Research Evidence from the Tourism
and Hospitality Industry
Quite a lot of evidence comes from research
conducted in the UK, where the tradition of
family business in tourismand hospitality is very
well established. Shaw and Williams (1987),
from a study of owners in Cornwall, determined
that motivations for leaving their previous job or
position were quite diverse. The most frequent
(23%) was to be self-employed. Personal or
family reasons were given by 19%, while 14%
were dissatisfied with previous employment and
10% mentioned the push factor of having been
made redundant. An additional 10% wanted to
move to Cornwall, while 3.3% were fleeing the
rat race. The remainder wanted to make more
money (3%) or enhance their career (6%).
Asked specifically why they established a busi-
ness in a particular location (all in Cornwall),
the main answers were: the environment, or
to move to Cornwall (25%); were in Cornwall
anyway (25%); economic reasons (18%); the
markets for their business (10%), and luck or
chance (14%).
The National Survey of Small Tourism and
Hospitality Firms inthe UK(Thomas et al., 1997)
questioned owners on their motives. Fully 90%
of owners gave non-economic reasons for being
in business. Few were motivated by the antici-
pation of greater financial rewards than could
be expected from paid employment. The most
common reasons given for business ownership
were to do what they enjoyed (45%) and the
desire for independence (30%). Only 4% con-
sidered ownership of their small business to be a
form of semi-retirement, while 10% believed
they had been driven to self-employment.
Rural and farm-related
Frequently, small farm-based family businesses
(e.g. farm-stays, caravan and campsites, B&B
operations) are established to support the main
farm business (Pearce, 1990; World Tourism
Organisation, 1997), but are also set up as a
42 Chapter 3
60
sideline or hobby, often by females (Kousis,
1989; Lynch, 1996; Oppermann, 1997). Other
rural tourism researchers have pointed to the
goals or rewards of improved social lives
(Frater, 1982; Pearce, 1990), and social
standing (Pearce, 1990).
A study of farm and ranch tourism in
Montana by Nickerson et al. (2001) determined
that 61%of owners had diversified for economic
reasons, while 23%had reasons external to their
operations and 16% had social, economic and
external reasons combined. Specific economic
reasons included: variable and uncertain farm
income; providing jobs for family, or helping
keep them on the farm; earning extra income;
loss of government funding; making better use of
assets, and taking advantage of tax incentives.
Non-economic reasons included: a desire for
companionship; meeting existing demand; edu-
cating the consumer, and pursuing an interest or
hobby. Apparently imitation of other enterprises
was a factor in many of these diversification
ventures.
Third World factors
Smith (1998) specifically evaluated small, Third
World tourism enterprises, noting that powerful
incentives existed for their establishment. These
included: taking local control over develop-
ment; acquiring status; gaining access to clubs
and business networks; building equity for a
family legacy or retirement assets; hiring family
members who might otherwise be unemploy-
able, and being ones own boss. Smith con-
cluded that in the Third World employees of
hotels and resorts were often better off than
their self-employed neighbours, owing to easier
work and higher pay. Accordingly, it can be
expected that family business motivations and
goals differ greatly between wealthy and poor
countries.
Lifestyle motives
In a study of small tourism businesses in
Victoria, Australia, Bransgrove and King (1996)
found that the top goals of owners/managers
were challenge/stimulus, business opportunity,
lifestyle, and long-term financial gain (account-
ing for 1824% each), but lifestyle goals were
twice as frequent in rural areas. A study of
tourism businesses in the Northland region
of New Zealand by Page et al. (1999) secured
data from about 300 operators. Fifty-four per
cent of respondents indicated their principal
motive for owning a tourism business was
enjoyment of their particular line of work, and
20% wanted to be their own boss.
Peters and Weirmair commented on the
explosion of tourism in Austria in the mass-
tourism-oriented 1970s:
. . . in Austria those who took over hotels and
related businesses from their parents or who
entered tourism from agriculture/forestry and
who obtained most of their external financing
through land collateral frequently fall into
the category of life style and/or part-time
entrepreneur.
(Peters and Weirmair, 2001)
Many of those who survived are nowfacing
serious financial problems because of high debt
loads. In Finland, Komppula (2000) found only
lifestyle entrepreneurs in his interviews with rural
tourism operators. Growth of the business was
not an objective in these enterprises.
Rural Western Australia
In this research, first published by Getz and
Carlsen (2000), the sample consisted of a com-
bination of two, mutually exclusive subsets:
(i) a general sample of rural tourism/hospitality
businesses in Western Australia; and (ii) a more
focused sample from one well-known tourist
region.
The state-wide sample was partially derived
from a list provided by Farm and Country
Holidays Association Inc., and augmented by
selections from the Royal Automobile Clubs
Western Australia Touring and Accommodation
Guide. Metropolitan Perth and other cities were
excluded from the sampling frame. The result
was a non-randomsampling covering all types of
tourism and hospitality businesses. Western
Australia is a very large, predominately rural
state. Outside the main metropolitan centre of
Perth, tourism opportunities abound in small-
town, beach, farm, and wilderness settings.
Starting the Family Business 43
61
The entire membership of the Augusta-
Margaret River Tourist Association was also
surveyed, which yielded a few types of business
that might not appear to be tourism-oriented, yet
membership in the organization suggests that
the owners believed they at least benefit from
tourism. This tourist region is located south of
Perth, approximately a 3-hour drive by car, and
includes very popular beaches, wineries, natural
areas and small towns. It is more intensively
developed for tourism than the majority of the
state, and enjoys a reputation for good climate,
attractive landscapes and a lifestyle associated
with fine dining and wine. Consequently, it has a
different character and appeal than most of the
rural regions of the state.
The mail-out survey, and a subsequent
reminder card, went to 357 businesses in the
Margaret River area and to another 455 busi-
nesses in the remainder of the state. The
response rate was 33% in Margaret River and
20% in the remainder of the state. The total
number of useable responses was 210 (for an
overall response rate of approximately 26%),
but included only 198 family or owner-operated
businesses, which have been used in the ensuing
analysis.
Respondents and characteristics of
their businesses
All 198 respondents used in the analysis indi-
cated that they had a family-owned business,
that is, owner-operated, or one family owns
controlling interest. They were dominated
(66.2%), by businesses owned by a married
couple, and 82.2% of respondents were
married. Sole proprietors accounted for 14.4%,
a partnership of two or more family members
9.7%, limited company 5.6%, a partnership
including family members 1.6%, and others
2.5%. Fully 96.4% of respondents reported
they were an owner, and it is likely that the
others, who said they were managers, were
family members.
Females were the largest group, accounting
for 59%of respondents. This imbalance possibly
reflects the dominance of women in B&B
and farm-stay operations. In terms of education,
the largest group (42.2%) of respondents had
high school qualifications, although 19.8% had
received a college diploma, 13.9% a university
degree, 11.2% an advanced degree, and
another 12.8% a trade qualification.
The dominant age category of respondents
was 4554 (41.4%), followed by 3544
(24.1%). Only two respondents (1%) were
under the age of 25, and only 11 (5.8%) were
aged 2534. The 5564 category accounted for
19.4% of the sample, and the 65-plus category
was 8.4%. Children (ages not defined) of the
respondents worked in only 23% of the busi-
nesses, although it is likely that parents will not
count young children as employees, regardless
of any involvement in the business operations.
There were 21 respondents with one child in the
business, 12 with two, nine with three, and four
with four involved children.
Based on the respondents own des-
criptions of their business, 75% of the sample
were accommodation operators, with the largest
block running guest ranches or farm-stays (47 =
25.1%). Campground/resort/self-catering opera-
tions was the next largest group (42 = 22.6%),
and B&B operations accounted for 40 (21.4%).
Only 7, or 3.7% of the businesses were hotels
or motels. Other types of operations included:
food or retail (13 = 7%); tour operation
(12 = 6.4%); winery (12 = 6.4%); tourist
attraction (7 = 3.7%); other services (6 =
3.2%) and manufacturing (1 = 0.5%). This
breakdown cannot be interpreted as an accurate
reflection of the rural tourism and hospitality
sectors overall, owing to limitations of the two
sampling frames and response rates.
Eighty-three per cent of the respondents
had started up the business, with only 4.2%
having inherited it. Also, most of the businesses
were recently started, with65.1%commencedin
the 1990s, 24.6% in the 1980s, and 5% in the
1970s. Seven respondents (3.5%) indicated
the business had started up in the 1800s. Fully
44.4% of businesses had been started within 5
years of the survey. In response to the question:
how many years have you been involved in
the business?, the modal category was 15
(54.6%). Only 16.5% had been involved longer
than 10 years (with 5.7% under 1 year and
23.2% between 5 and 10).
Most were small and micro businesses.
Ninety-five per cent employed 10 or fewer per-
sons, with 4% reporting between 10 and 50 and
one (0.5%) reporting over 100 persons. As well,
44 Chapter 3
62
80% of the tourism and hospitality businesses
in this sample reported an annual revenue of
under Aus$100,000, while 14% had revenues
of between Aus$100,000 and Aus$500,000 and
2.6% over Aus$1 million. Sixty-nine per cent
reported fewer than 1000 customers per year.
The Margaret River sample was somewhat
different from the overall state sample, although
differences on goals were not evaluated because
of the quite different sampling frames. Com-
pared to the state-wide sample, Margaret River
respondents were less dominated by accommo-
dation and had fewer female respondents.
These data portray a population of mainly
middle-aged business operators. They might
have had rural roots or connections, but they
were mostly not young rural natives taking over
family businesses or starting first careers.
Start-up goals
Respondents were first asked an open question:
Please describe why you got started in this
business. Answers were grouped for coding
purposes, with results displayed in Table 3.1.
The largest single category (34.1%) concerned
lifestyle decisions, and the second main
category concerned business opportunities and
investments (27.6%). Business-related answers
were the most frequent.
Table 3.2 presents responses to the ques-
tion: How important were the following goals
to you when getting started in this business?
The goal statements were all carefully derived
fromthe family business literature as well as from
12 pre-survey interviews with family business
owners covering their motivations and goals.
Respondents were asked to tick one box of
five beside each of the 12 statements, with the
anchors being not at all important and very
important.
The researchers first sought to determine
the relative importance of the start-up goals.
The most striking results were that living in the
right environment (mean = 4.51, out of 5) and
enjoying a good lifestyle (4.37) were the stron-
gest goals by far, with hardly any respondents
not ranking them as important or very impor-
tant. Other very important goals for these
respondents were to permit me to become
financially independent (mean = 3.97) and to
be my own boss (3.94), both of which express
a desire for autonomy. To provide me with a
challenge (3.93) and to meet interesting peo-
ple (3.96) demonstrate that social and personal
reasons were important to many respondents.
The lowest-ranked goals were to gain prestige
(mean = 2.16) and to make lots of money
(mean = 2.88).
A second objective of the analysis was to
reveal any underlying structure in the 12 goal
statements specifically, which goals go together
in defining a lifestyle orientation versus a profit-
maximizing orientation? Accordingly, a factor
analysis (principal components analysis) was
conducted on the 12 goals. The factors were
then rotated using Varimax rotation with Kaiser
Normalization. This resulted in four factors that
explained 60.4%of the variance in respondents
scores; this level of explanation is good, but low
enough to suggest that the four factors do not
explainall the underlying patterns of responses.
The order of statements in Table 3.2 has
been altered from the original questionnaire so
that statements comprising the four factors could
be grouped together. Each factor was named
according to the researchers interpretation of
underlying meaning. The five Lifestyle vari-
ables grouped very well together in statistical
Categories
Valid % of total
responses
Appealing lifestyle
Business opportunity/investment
Worked in related business/
to diversify
To preserve the home
Retirement project
Meeting people
Recover debt on acquired land
Assistant to husband
Build business then sell for
retirement
Thought it would be fun/good
idea
Saw a market need for the
business
34.1
27.6
9.7
6.5
6.5
3.8
2.7
2.7
2.2
1.6
1.6
Categorized from an open-ended question:
Please describe why you got started in this
business?; source: Getz and Carlsen, 2000.
Table 3.1. Start-up goals of rural family
businesses in Western Australia.
63
terms (they are shown as F1 in Table 3.2), and
were by far the most important in light of the
mean scores and high factor loadings. Note that
F1 explains 21.3%of total variance and includes
the two highest means (4.51 and 4.37).
Three goal statements constituted the
Money factor (F2; explaining 14.2% of vari-
ance), including the second-lowest mean of all
to make lots of money (2.88). The other two
goals on this factor were, however, important to
the respondents. Factor 3 was called Stimula-
tion (12.7% of variance) and contained two
fairly important statements. Factor 4 was called
Independence (12.2% of variance), assuming
that prestige is one of the appeals of being ones
own boss. In hindsight, especially given the
results of the analysis from Bornholm and
Canmore which follows, Factor 4 should have
been called Autonomy. This is because being
ones own boss was shown to be an important
goal for entrepreneurs and family business own-
ers in its own right.
It was interesting to find that at least
one goal in each of the four factors was very
important to many respondents, judging by the
high mean values. While it can be concluded
that lifestyle was, overall, the most important,
the findings also reveal that multiple goals
were involved in the start-up decisions of these
respondents in rural Western Australia.
To determine if there were identifiable
differences in the types of respondents according
to the way they rated the goal statements, the
researchers employed several statistical tests on
the individual goal statements. This technique
found no statistically significant differences by
reference to demographic, business and owner-
ship variables. But what of the four factors
should the groupings of statements reflect
some underlying differences in respondents? To
answer this important question, demographic,
ownership and business-type variables were
tested against four new variables consisting of
the summed means from statements in each
factor. Either analysis of variance (ANOVA) or
an independent means t-test was employed. The
sample size imposed some limitations on this
analysis. A much larger sample might have been
able to identify more statistically significant
differences.
46 Chapter 3
Goals
1
Not at all
important
(valid % of
responses) 2 3 4
5
Very
important Means Factors
Lifestyle
To keep my family together
To keep this property in the family
To live in the right environment
To support my/our leisure interests
To enjoy a good lifestyle
Money
To make lots of money
To permit me to become financially
independent
To provide a retirement income
Stimulation
To meet interesting people
To provide me with a challenge
Independence
To be my own boss
To gain prestige by operating a
business
11.7
22.7
2.1
11.5
2.1
17.9
7.8
11.0
5.7
5.8
7.4
45.8
6.9
4.3
1.1
11.0
1.1
18.4
5.2
9.9
5.7
6.8
8.4
16.1
22.3
16.2
8.5
23.6
12.1
32.1
15.1
25.7
13.5
16.2
12.6
19.8
16.5
18.9
20.7
17.3
26.8
20.5
26.0
18.8
36.5
31.4
26.3
13.0
42.6
37.8
67.6
36.6
57.9
11.1
45.8
34.6
38.5
39.8
45.3
5.2
3.71
3.45
4.51
3.57
4.37
2.88
3.97
3.56
3.96
3.93
3.94
2.16
F1
F1
F1
F1
F1
F2
F2
F2
F3
F3
F4
F4
Source: Getz and Carlsen, 2000.
Table 3.2. Importance of start-up goals among rural family business owners in Western Australia
(n = 198).
64
Business type made a difference (after re-
grouping to combine the manufacturing, food/
retail and other services categories) with regard
to the Money factor. Tour operators, compared
to the hotel and motel owners, were much
less oriented toward making money. Hotel and
motel operators probably have invested consid-
erable financial resources in their businesses and
expect a good return on investment. Although
other inter-group differences were not statisti-
cally significant, a plausible hypothesis emerges:
the more money one invests in the business, the
more likely that financial goals dominate. That is
not to say, however, that the reason for investing
in a rural business was not in part related to envi-
ronment and lifestyle considerations. In some
of the cases, existing farm operations were
probably converted in whole or part to tourism
operations (e.g. B&B or caravan park), so the
level of investment was less than if a new
enterprise was started from scratch.
Another variable found to be significant
is that of ownership type. Married couples and
sole proprietors displayed statistically significant
differences in their responses to the variable that
comprises the Independence factor. Sole pro-
prietors (i.e. one person owning and operating
the business, not a couple or family) were much
more likely to agree that being ones own boss
and gaining prestige were important start-up
goals.
The age of respondents was also important,
specifically with regard to the lifestyle factor.
Those aged 3544 had significantly different
responses fromthe 4554 cohort, with the youn-
ger owners displaying much higher agreement
with the five statements in this factor. This is pre-
sumably linked to the prime family-formation
stage, with those aged 3544 being more likely
to have children at home.
As well, both the 2534 and 3544 age
groups were significantly different from the
65+group regarding the Independence factor.
Younger respondents were much higher in
their agreement with the two statements in
this component. Apparently the 65+ category,
which coincides with normal retirement ages,
is less likely to be interested in prestige or
self-employment. Younger, sole proprietors
favoured these two reasons.
Whether or not this population is similar
to that in other rural areas is open to future
comparisons. In some traditional communities,
for example, it might be expected that most
family businesses are inherited rather than new
businesses set up by in-migrants. Even within
Western Australia differences were noted, as the
Margaret River subsample had a different mix of
business types. It can be hypothesized that more
developed rural tourism destinations attract and
sustain different types of businesses and quite
likely different types of investors. Developeddes-
tinations can count on higher levels of publicity
and demand, less seasonality, and a broader
range of attractions and services.
The Western Australian sample strongly
suggests that tourism and hospitality sectors are
attracting many middle-aged couples and fami-
lies to live and invest, for predominantly lifestyle
and family reasons. In addition, there is a group
of sole proprietors (who might have informal
family involvement in the business) who appear
to be motivated more by normal profit-making
goals, but whoalsoprefer the rural environment.
Overall, the analysis tends to confirm the
presence of both family-oriented businesses and
business-oriented families (or sole proprietors)
as suggested by Singer and Donahu (1992), but
in these rural tourism and hospitality sectors,
living in the rural environment, plus family
and lifestyle considerations, were significant for
almost everyone.
Canada and Denmark
This comparative research (by Getz and
Petersen, 2002) of somewhat different resort
settings (Canmore, Alberta in Canada and the
island of Bornholm, Denmark) in two countries
was built on the earlier Australian work, but
added several dimensions. The same start-up
goals were tested again, and a number of
interviews conducted in Denmark to obtain
additional insights. Detailed analysis has been
performed on these comparative data to search
for and characterize profit- and growth-oriented
entrepreneurs.
These specific areas were chosen for mostly
practical reasons, being immediately accessible
to the collaborating researchers. As discussed
later, they are similar enough to enable effective
comparison of family business owners, yet
65
different enough to yield some significant
variations in results.
The resorts
Canmore is a rapidly-growing resort town
situated just outside the boundary of Banff
National Park, a 1-hour drive west of Calgary,
Alberta. Its very recent transition from coal-
mining village to tourist destination is attribut-
able to several major factors: staging of part of
the 1988 Winter Olympics in Canmore, which
generated publicity and a world-class facility
for cross-country skiing; a development freeze
within the national park, resulting in over-spill
development in Canmore; and mounting
demand for second homes in the mountains.
Consequently, since 1988, tourism has become
the towns major industry. Numerous accom-
modation, retail, tour and other services have
opened there.
Canmores Business Registry, with interpre-
tation by local economic development officials,
revealed 1034 businesses of which 61% were
considered to be family owned, that is owned
by identifiable persons, not corporations. A total
of 198 tourism-related businesses were identi-
fied and it was estimated that 78%of these were
family owned. Almost all the family-owned
businesses are owner-managed with resident
owners, although a very small proportion of
owners resided outside the community. A total
of 100 respondents completed the survey.
A breakdown of accommodation busi-
nesses in Canmore reveals that it is heavily
weighted to B&B houses (79 out of 106),
and 36 of these B&B owners replied to the
questionnaire. All B&B operations were family
businesses. In addition there were 27 other
accommodation businesses (hotels and motels,
plus one campground) of which 16 (59%) were
believed to be family owned. The survey yielded
nine respondents fromthese other accommoda-
tion types. In analysing the data it was therefore
desirable to isolate B&B for a number of
comparisons to other business types.
The Island of Bornholm (in the Baltic Sea)
is one of the most renowned destinations in
Denmark, having been popular since the late
19th century. It has been described as . . .
a mature seaside resort with an established
tourism infrastructure dominated by small
enterprises (Gyimothy 2000: 56). The climate
is temperate and often sunny, but winters are
harsh and not attractive for visitors. The main
attractions are unspoiled rural and coastal scen-
ery, quaint fishing villages, recreational activities
(hiking, fishing, yachting, windsurfing, golfing,
shopping, bird watching, dining, bicycling,
bathing), a number of sandy beaches, historic
churches, arts and crafts (especially glass blow-
ing and ceramics), and visiting small museums.
The summer season is typically only 2 months in
length.
Bornholm is similar to two other Baltic
islands, land and Gotland. All three islands
possess high levels of local ownership and con-
trol; Twining-Wardand Baum(1998) concluded
that all three had entered a period of decline and
were suffering from the ill-effects of seasonally
lowdemand. The problems are augmented by a
dominance of small, family enterprises . . .
which in many cases lack the professional train-
ing required to secure a high quality of service
(Twining-Ward and Baum, 1998: 135).
Method
Research was undertaken in 2001 by Getz
and Petersen, and the Bornholm portion was
conducted with co-operation from the Centre
for Regional and Tourism Research (CRT) in
Bornholm. The main instrument was a self-
completion, mail-back questionnaire written in
English, then translated into Danish by staff at
the CRT, then back-translated into English to
ensure consistency. In addition, interviews were
conducted in Danish with a sub-sample on
Bornholm, but these were not attempted in
Canmore.
The sampling frame in both cases was
a census of businesses, with owner-managers
selected for study. In Canmore the researchers
were assisted in this selection by the local
economic development agency which possesses
intimate knowledge of the community. In
Bornholm the researchers relied on detailed
personal knowledge and input from local busi-
ness owners to determine the sample. A few
errors might have occurred in this process, but
they would be insufficient to bias the results
significantly . Sampling also resulted in a few
duplications (i.e. owners of multiple businesses),
and also a small number of omissions owing to a
48 Chapter 3
66
lack of information. On Bornholm, an unknown
number of individual owners of summer
houses for rent were not included.
Privately-owned attractions and recreation
suppliers were included. Tourist-oriented manu-
facturing and retailing was included, specifically
arts and crafts producers, antique dealers, gift
shops and candy manufacturers. Grocery, cloth-
ing, furniture and other stores were excluded
even though in resorts a portion of their trade
would definitely come from non-residents.
Private taxi and bus companies were covered.
Consequently, the samples can be said to
represent all the major elements of the tourism
and hospitality sectors within a resort, but not of
the industry as a whole, as they exclude major
transport companies, chains and corporate
investments. The surveys were close to being a
census but did not capture 100% of business
owners, andunder-represent the retailing sector.
An estimate was made by local researchers
of the total number of tourism and hospitality
businesses in the Bornholm study area, using
municipal directories, and the proportion that
was family owned (based on detailed local know-
ledge). As in Canmore, the principal criterion for
determining if a business was family owned
was the presence of resident, owner-managers.
There were 317 identifiable tourism/hospitality
businesses in the two Bornholm municipalities
covered by the research, of which fully 95.3%
were deemed to be family businesses. The main
foothold of corporate ownership is that of larger
accommodation establishments.
The questionnaire sample of 84 owners on
Bornholmis not directly comparable to the busi-
ness categories used in Canmore, because each
respondent was asked to indicate all the different
activities of their business and a small number of
them ran multiple businesses or multi-activity
businesses (such as hotel plus restaurant). Of the
120 activities listed by respondents, accommo-
dation was the largest category (31), followed by
restaurants/cafes (22), and then arts and crafts
producers (21), (most of which are combined
production and retail operations).
Profile of respondents and their businesses
In both resorts (see Table 3.3) the respondents
were predominantly married (8889%), but
there were more males in the Bornholm group
(63% compared with 46%), and they were,
on average, older. This reflects the older
age of the businesses covered by the sample
(65% of the Canmore owners had owned their
business for 5 years or less, compared with 32%
in Bornholm), and in turn the much longer
history of tourism development on the island.
Bornholm respondents might appear to
be better educated, but a higher proportion of
Canmore respondents had university degrees,
compared to vocational education in Bornholm.
Data on business types are not directly compara-
ble as the industry is somewhat different in these
resorts. The largest group in both cases were
accommodation operators, but in Canmore
there was a high proportion of B&B owners
while the Bornholmsample are mostly operators
of small hotels and pensions (pensions are typi-
cally smaller than hotels, but often indistinguish-
able). The Bornholm sample also contained a
group of 21 arts and craft producers/retailers, but
there were none of these in the Canmore sample
(one operates in the town).
Ownership was largely in the hands of
married couples and sole proprietors. Quite a
fewfamilies had formed companies, but partner-
ships were a small minority. There was a higher
proportion of sole proprietors in Bornholmand a
higher proportion of married couples as owners
in Canmore. Exact percentages are not possible
because multiple answers were permitted on the
ownership question.
In both resorts the businesses were very
small, with mostly just the owner(s) being
employed. In Bornholm less than half had non-
family, full-time, paid employees; only 11 invol-
ved children and seven others involved other
family members besides spouses. Companies
(as opposed to other ownership forms) and non-
accommodation businesses had more paid, full-
time, non-family employees. In Canmore, less
than half had employees and only 17 involved
children or other family besides a spouse. Those
Canmore businesses owned by companies
had more employees, and these were primarily
hotels, restaurants, and to a lesser extent tour
companies. None of the B&B establishments
had non-family, full-time paid employees.
In Canmore, a relatively new resort,
74.5% of the businesses were started by the
respondents, compared to 56.3% in Bornholm.
There were no inherited businesses in Canmore,
67
50 Chapter 3
Profile variables
Bornholm
n = 84 (responses to individual
questions vary)
Canmore
n = 100 (responses to Individual
questions vary)
Gender Male:
Female:
63.3%
36.7%
Male:
Female:
45.8%
54.2%
Marital status Married:
Other:
88.8%
11.3%
Married:
Other:
87.8%
12.2%
Age Under 25:
2534
3544
4554
5564
65+
1.3%
5.0%
27.5%
31.3%
30.0%
5.0%
Under 25:
2534
3544
4554
5564
65+
0.0%
10%.0
40.0%
28.0%
15.0%
7.0%
Included in the business
(respondents were
asked to indicate the
activities included in
their business, yielding
multiple answers)
Accommodation:
Restaurant/cafe:
Attraction:
Art/craft:
Retail:
Tour service:
Other:
31.0%
22.0%
5.0%
21.0%
8.0%
4.0%
23.0%
Accommodation:
Restaurant/cafe:
Attraction:
Recreation:
Retail:
Tour service:
Other:
45.0%
19.0%
2.0%
3.0%
20.0%
12.0%
26.0%
Year business started 2000:
1990s:
1980s:
1970s:
1960s:
1950s:
older:
(oldest: 1887)
2.6%
33.3%
14.1%
12.8%
15.4%
7.7%
14.1%
2000:
1990s:
1980s:
1970s:
1960s:
1950s:
older:
10%.0
67%.0
14%.0
3%.0
1%.0
2%.0
3%.0
Number of years in
this business
(cumulative %)
1 or less:
5 or less:
10 or less:
20 or less:
30 or less:
7.3%
31.7%
53.7%
79.3%
91.5%
1 or less:
5 or less:
10 or less:
20 or less:
30 or less:
13%.0
65.0%
88.0%
96.7%
98.9%
Purchased or started?

Purchased:
Started myself:
Inherited:
Renting:
38.1%
56.3%
2.5%
1.3%
Purchased:
Started myself:
74.5%
25.5%
Ownership
(multiple responses
were permitted)
Husband/wife:
Ltd. company:
Sole proprietor:
Partnership no family:
Partnership with family:
Other:
21.0%
14.0%
38.0%
2.0%
4.0%
4.0%
Husband/wife:
Ltd. company:
Sole proprietor:
Partnership no family:
Partnership with family:
Other:
50.0%
29.0%
26.0%
5.0%
1.0%
2.0%
Family involvement
(multiple answers
were permitted)
Only me:
With spouse:
Child(ren):
Other family:
30.0%
41.0%
11.0%
7.0%
Only me:
With spouse:
Child(ren):
Other family:
25.0%
64.0%
12.0%
5.0%
Paid employees
(non-family, full-time)
None:
1:
210:
over 10:
Range: 035
53%
12.0%
28.9%
6.0%
None:
1:
210:
over 10:
Range: 035
62.5%
6.3 %
21.9%
9.4%
Table 3.3. Profiles of the respondents from a survey of family business owners in Denmark (Bornholm)
and Canada (Canmore).
68
but several in Bornholm (2.5%). Previous busi-
ness ownership was high (31% of respondents
in Bornholm and 43% in Canmore), but it is
unknown what kinds of businesses they were.
Start-up goals
The 12 goal statements developed for the Getz
and Carlsen (2000) research were used again,
and three new goals were provided to the
Bornholm data in consideration of local condi-
tions. Table 3.4 displays the mean scores (out
of 5), and overall, there was a high degree of
congruence between the two countries samples
on their start-up goals.
In terms of means, the highest six are the
same for each sample, although the ranking
is different. Several goals generated differences
between the resorts that were statistically
significant, as indicated in the table.
The highest mean among the Bornholm
respondents was 4.36 for to provide me with
a challenge, but this was significantly lower
in Canmore, at 3.75. The highest mean for
Canmore respondents was 4.23 for to enjoy a
good lifestyle, but it was also important to the
Danes at 3.90 (not a statistically significant
difference). To be my own boss was second-
highest in Canmore (4.20), compared to 3.99 in
Denmark (not significantlydifferent). Amazingly,
to live in the right environment attracted almost
identical and very high means in both samples
(4.03 and 4.02). The other very high mean in the
Danish group was to permit me to become
financially independent at 4.03, compared with
3.95 in Canmore (not significantly different).
Looking at the other statistically different
responses, to make lots of money appealed
more to the Canadians (mean = 3.18) than the
Danes (2.76), as did to support my/our leisure
interests (3.73 compared with 3.16), and to
provide a retirement income (3.40 compared
to 2.72). None of the three extra items for the
Danish sample attracted high means, although
to move to Bornholm was apparently a
motivator for some of the respondents.
Based on the means, it appears that the
family business owners in both resort settings
were motivated equally by lifestyle and
locational preferences, just as in the rural
Western Australian sample. Autonomy goals
were also very important to both groups. The
Canmore resort setting, however, appears to
have attracted more entrepreneurs interested
in making lots of money and supporting their
retirement, and more owners with specific recre-
ational interests. It might be that the mountains
have a stronger recreational appeal than the sea-
side! Danish owners, on the other hand, appear
tobe more motivatedby the needfor challenge.
B&B owners in Canmore
In Canmore, B&B owners (36 in the sample)
were the most substantial sub-group and were
significantly different from the others. Twenty-
seven B&Bs are owned jointly by married
couples and nine were owned by sole propri-
etors, (although 28 of the B&B respondents
were female). Significantly (Chi square =
0.005) none of the B&B owners had children
working in their businesses, and none had
non-family, full-time paid employees. None
were under the ownership of a company
limited, but 29 of 64 other businesses were.
Fully 82% of responding B&B owners reported
they started the business themselves.
B&B owners in Canmore were much less
concerned with the goal To permit me to
become financially independent. Only 39% of
them ranked it as important or very important,
compared with 82% of the other business
Profile variables
Bornholm
n = 84 (responses to individual
questions vary)
Canmore
n = 100 (responses to Individual
questions vary)
Education Post-secondary: 76.3% Post-secondary: 66%.0
Previous business
ownership
Yes:
No:
31.2%
68.8%
Yes:
No:
43.4%
56.6%
Source: Getz and Petersen, 2002.
Table 3.3. Continued.
69
owners. The B&B owners were also significantly
less in agreement with the statements It is crucial
to keep the business profitable and I want to
keep the business growing. For this group,
To meet interesting people was a significantly
higher motive.
Factor analysis of start-up goals
Similar to the analysis of data from Australia,
factor analysis using varimax rotation was per-
formed on both sets of start-up goals. It would
be expected that the three samples from dif-
ferent countries would display different results,
and they do in some specific ways, but the
similarities turned out to be more important. In
particular, the lifestyle factor turns out to be
paramount in all three samples.
Table 3.5 shows results of the factor
analysis for both Canmore and Bornholm.
The statements have been kept in their original
questionnaire order, and the factor groupings
(described below) for each resort have been
indicated with F1F6. Each factor was given a
name based on the researchers interpretation of
underlying meanings. Usually this is indicated,
and named after the goal statement with the
highest factor loading. When examining these
results, particular attention should be given to
the congruence of the two goal statements
defining lifestyle in both samples, namely to
enjoy a good lifestyle and to support my/our
leisure interests.
For Bornholm, six factors were derived with
a cumulative 72.2% of variance explained. Fac-
tor 1 (explaining 24.5% of variance) consists of
three goals all clearly linked to Lifestyle consid-
erations, demonstrating the synergistic allure of
an island location (To live in the right environ-
ment), leisure interests and enjoying a good life-
style. Although two of the three are the same in
Canmores Lifestyle factor, the goal to live in the
right environment is more closely associated
withfamily-first concerns among the Canadians.
Factor 2, called Challenge (12.2% of vari-
ance), encompasses the top-ranked goal To
52 Chapter 3
Goals when starting this business
Bornholm: means
(out of 5)
(n = 7174) Factor
Canmore: means
(out of 5)
(n = 9297) Factor
(1) To be my own boss
(2) To keep my family together
(3) To keep this property in the family
(4) To live in the right environment
(5) To support my/our leisure interests
Sig. = 0.016
(6) To enjoy a good lifestyle
(7) To make lots of money
Sig. = 0.030
(8) To gain prestige by operating a business
(9) To meet interesting people.
(10) To provide a retirement income
Sig. = 0.002
(11) To provide me with a challenge
Sig. = 0.000
(12) To permit me to become financially
independent
(13) To supplement my income (from other
sources)
(14) To avoid unemployment
(15) To move to Bornholm
3.99
a
2.99
a
2.29
a
4.03
a
3.16
a
3.90
a
2.76
a
2.06
a
3.74
a
2.72
a
4.36
a
4.03
a
2.10
a
2.63
a
2.83
a
F2
F4/F5
F4
F1
F1
F3
F3
F3
F4
F3
F2
F6
F5
F5
F2
4.20
a
3.18
a
2.12
a
4.02
a
3.73
a
4.23
a
3.18
a
2.19
a
3.84
a
3.40
a
3.75
a
3.95
a
Not asked
N/A
N/A
F1
F3
F2
F3
F1
F2
F1
F2
F4
F4
F2
F4
F2
a
Indicates significant differences; source: Getz and Petersen, 2002.
N/A, not applicable.
Table 3.4. Level of agreement with goals when starting this business.
70
provide me with a challenge and the highly-
rated To be my own boss. There is definitely
a high degree of autonomy orientation in
this grouping, but it also includes moving to
Bornholm, which appealed only to a few.
Factor 3 has been called Money Matters
(10.1% of variance) as the highest loading
was To make lots of money, but it also includes
the prestige and retirement-income goals. It is
important to note that the means for these three
items are all low, indicating that money and
prestige were a minor set of goals among the
Danish owners. However, it is also possible that
in Denmark there is a social/cultural stigma
attached to admitting to these goals.
Factor 4, Family First (9.3% of variance),
includes To keep this property in the family and
Tokeepmy family together, bothof whichwere
lowly rated. It is unclear why To meet interesting
people loads on to this factor, as it was a
fairly highly rated goal. Also, keeping the family
together was almost equally associated with
Factor 5. To avoid unemployment is the
important goal in Factor 5 (8.2% of variance),
although To keep my family together loads
equally here and in Factor 4. Together they
have been labelled Security. Factor 6 (7.8% of
variance) contains only one item, To permit me
to become financially independent. It yielded
a high mean in the sample and is therefore
Statements about this business
Bornholm
(n = 7782)
Means
(out of 5) Factors
Canmore
(n = 96100)
Means
(out of 5) Factors
(1) It is crucial to keep this business profitable
Sig. = 0.033
(2) I want to keep the business growing
Sig. = 0.002
(3) Enjoying the job is more important than making lots
of money
(4) In this business customers cannot be separated from
personal life
(5) This business currently meets my performance targets
(6) It should be run on purely business principles
(7) I would rather keep the business modest and under
control than have it grow too big
(8) My personal/family interests take priority over running
the business
Sig. = 0.018
(9) Eventually the business will be sold for the best
possible price
(10) This business is highly seasonal
(11) I come into daily contact with my customers
(12) It is hard to separate work and family/personal life in
a tourism business
(13) I enjoy taking risks
(14) After making this business a success I want to start
another
Sig. = 0.000
(15) The business is a legacy for my children
(16) I am always trying something new
(17) I believe in hands-on management
Sig. = 0.049
(18) It is best to avoid debt as much as possible
Sig. = 0.001
4.73
a
3.54
a
3.88
a
2.91
a
3.73
a
3.11
a
3.99
a
3.28
a
3.46
a
4.23
a
4.46
a
3.71
a
3.81
a
1.79
a
2.01
a
3.53
a
4.67
a
4.65
a
F3
F3
F4
F3
F1
F4
F3
F2
F2
F2
F2
F1
F1
4.48
a
4.10
a
3.96
a
2.95
a
3.40
a
2.92
a
3.78
a
3.70
a
3.57
a
4.23
a
4.24
a
3.69
a
3.46
a
2.84
a
1.90
a
3.55
a
4.43
a
4.15
a
F1
F1
F3
F4
F3
F3
F1
F2
F2
F2
F1
F4
a
Indicates significant differences.
Table 3.5. Attitudes and future-oriented goals.
71
important, but conceptually it seems to fit better
with Security or Money Matters.
Turning to the Canmore sample, a four-
factor solution was derived that cumulatively
explains 63% of variance among the responses.
As with the Danish sample, Factor 1 is labelled
Lifestyle (explaining 26.9%of variance). It con-
tains two of the same goals (lifestyle and leisure),
but is associatedmore with To be my own boss,
whereas among Danish respondents the third
goal in the Lifestyle Factor was To live in the
right environment. Nevertheless, all five of these
goals were important or very important to both
samples.
Factor 2 is calledMoney Matters (13.8%of
variance) as it contains To make lots of money
and To permit me to become financially inde-
pendent. Making lots of money was significantly
more important to the Canmore owners (means:
3.18 versus 2.76) whereas financial independ-
ence was important in both samples (Bornholm
4.03; Canmore 3.75).
Factor 3 (11.4% of variance) has been
called Family First. It includes keeping the
family together, keeping the property in the
family, and living in the right environment. Of
these three goals, keeping the property in the
family was unimportant, while living in the right
environment was very important.
Factor 4 (10.9%of variance) is termed Pres-
tige, but the two goals it contains are a strange
mix. To gain prestige by operating a business
achieved a very low mean of 2.19 among
the Canmore respondents, whereas To meet
interesting people was a much higher 3.84.
Characteristics of lifestyle- and
money-oriented respondents
Several facts stand out in making a comparison
between the Bornholm and Canmore samples.
Most important is that Lifestyle is the dominant
factor in both, and that the autonomy-related
goals (especially the highly-ranked To be my
own boss and To permit me to become finan-
cially independent) were also very important.
In Canmore financial independence correlated
more closely with making lots of money
whereas in Bornholm it stood alone. In some
owners minds, being ones own boss might be
a lifestyle consideration (as in Canmore) and
to others it is more linked to challenge (as in
Bornholm). Although Money matters emerges
as a distinct factor in both samples, it is not very
important to a majority of respondents.
Could any differences be detected among
respondents favouring lifestyle or money
matters? Analysis began with creation of a new
variable comprising the summed means of the
three goals in the Lifestyle factor. Two of the
three Lifestyle goals are identical, but one is
different between the two resort samples. Within
each sample independent means t-tests were
employed to detect significant correlations
between the newlifestyle variable and a number
of business and ownership-related variables.
In Bornholm, it was determined that sole
proprietors (n = 38) were significantly more
lifestyle-oriented than others. Although gender
was not a significantly different variable, it
is noteworthy that more females than males
were sole proprietors (20 females and 17 males).
Owners of arts and crafts establishments were far
more lifestyle-oriented than other types (means:
4.36 vs. 3.42). Of the 19 arts and crafts owners,
11 were female. Among Canmore owners, life-
style start-up goals were so predominant that no
significant correlations could be found.
Next, a new variable was created for
each sample by summing the means in the
Money Matters factors. The goal To make lots
of money was included in both Canmore and
Bornholm. However, in Bornholm the other
goals in this factor concerned prestige and
retirement income, while in Canmore it was
financial independence and retirement income.
Accommodation owners in Canmore had
significantlylower means onthe Money Matters
goals, nodoubt reflecting the dominance of B&B
establishments, while restaurant and caf own-
ers were significantly more money-oriented than
others. Businesses owned by married couples
were significantly less money-oriented as were
female respondents. Among the Bornholmsam-
ple only gender made a difference, with male
respondents being significantly less money-
oriented. But the very low scores assigned to
these goals show that the entire Danish sample
was less money-oriented than the Canadian.
Attitudes and future-oriented goals
It is possible that motives and goals change
after starting the family business. In particular,
54 Chapter 3
72
owners should be able to articulate goals for the
future of the business and the way they want to
operate it.
Accordingly, respondents in Bornholm and
Canmore were also asked to indicate their level
of agreement (on a five-point Likert scale) with
18 statements about this business (see Table
3.5). The scales were identical in both samples.
The statements were of three types: attitudes that
are likely to shape strategy; explicit goals for the
future, and some factual statements about the
nature of the business. The factual questions
(numbers 4, 5, 10, 11, and 12) are not included
in the analysis here, but are relevant in
subsequent chapters.
As with the start-up goals, the statements
pertaining to attitudes and future-oriented goals
were based on family business and entrepre-
neurship literature plus the interviews that pre-
ceded research in rural Western Australia. They
were intended to reflect a range of possible
orientations, and in particular analysis was
directedat identifying and profiling those owners
who were growth-oriented.
Table 3.5 displays the means achieved
for each statement in both samples, indicates
statistically significant differences between the
two samples, and shows the factors described
below. The statement It is crucial to keep this
business profitable was highly rated in both
samples, but significantly more so in Bornholm.
This was a surprise, given that the start-up goals
suggested a higher level of profit orientation in
Canmore. A likely explanation is that almost
all business owners recognize the need for
profitable management, and so this statement
cannot be used to differentiate respondents.
The best single item for differentiating growth-
oriented entrepreneurs is the obvious one: I
want to keep the business growing. Canmore
respondents were much more growth-oriented
(with a mean of 4.10, compared to 3.54 for
Bornholm), and the difference was statistically
significant.
Looking at the other high mean values,
both autonomy (i.e. I believe in hands-on
management) and debt avoidance were highly
valued in both samples, but significantly more
so in Bornholm. There were two other signifi-
cant differences of note. The first pertained to
family versus business orientation(My personal/
family interests take priority over running the
business), with both samples agreeing moder-
ately but Canmore respondents significantly
more so. Also, both samples were not very
receptive to the notion of starting another busi-
ness (After making this business a success I want
to start another), but the Canmore respondents
were significantly less interested.
Factor analysis of future-oriented
business goals
Factor analysis was conducted to reveal under-
lying dimensions in the future-oriented goals
(the five factual statements not being included
in this analysis), and to permit identification
of respondents associated with each factor, if
possible. A four-factor solution was derived for
each sample, as shown on Table 3.5. Note that
the researchers have to assign items to each
factor on the basis of their factor loadings and
sometimes there are problems because factor
loadings can be negative (as with item 14 for
Canmore) or are too low to be statistically
significant. Some interpretation is therefore
required.
For Bornholm, the total variance explained
by the four factors is 55.9%, which is not particu-
larly strong. Factor one, Control, explains the
most at 19.5% of total variance. It joins three
items related to keeping the business modest,
and favouring hands-on management and debt
avoidance. All three display high means in
the Bornholm sample, demonstrating that a
majority were autonomy-oriented.
Innovation describes Factor 2 in Born-
holm (14.5% of variance explained). This factor
includes two significant loadings (I am always
trying something new and I enjoy taking risks.
The means for these statements were 3.53 and
3.81, much less than those for the Control
items. Given the overall lifestyle and autonomy-
orientation of the Bornholm sample, it is proba-
ble that most of the innovation occurs within the
business, especially in arts and crafts, rather than
in the form of new ventures and growth. Two
other items were associated with this factor, but
the loadings were too low to be statistically
significant: starting a new business and the
business as a legacy for children. As well, both
those statements yielded very low means.
Factor 3 (12.4%of variance) contains three
statements which are interpreted as defining
73
the profit-oriented entrepreneur, and while the
goal I want to keep the business growing is
loaded in this factor, it was too low to be statisti-
cally significant. What this appears to reflect
among the Bornholm sample is the majoritys
desire for a successful business, but one that is
under control and does not grow very much if
at all. The fourth factor for Bornholm is Enjoy-
ment (9.4%of variance) and the two statements
in it suggest an orientation opposite to that of
profit-making.
In Canmore the four-factor solution
explains 55% of variance. Profit is Factor 1,
explaining 20.8% of variance. Means for
the three statements in this factor are high
(It is crucial to keep the business profitable,
4.48; I want to keep the business growing, 4.10;
Eventually the business will be sold for the
best possible price, 3.57). This factor appears
to define the growth-oriented entrepreneur in
terms of attitudes and future goals, so for some
owners in Canmore at least profit and growth
are closely linked. I believe in hands-on
management also loads here (although not
significantly), thereby suggesting a link
between autonomy, profit and growth unlike
Bornholm.
Factor 2 for Canmore has been called
Innovation (12.7% of variance). The three
statements are identical to those in the
same-named Bornholm factor, and again the
legacy goal is loaded here but is not statistically
significant. Very few respondents in either
sample had a legacy in mind.
Factor 3, Enjoyment (10.2% of variance),
contains two statements identical to the enjoy-
ment factor in Bornholm. The difference is that
in Canmore keeping the business modest and
under control is more associatedwith enjoyment
(although the loading here is not statistically
significant).
Factor 4 contains one significant loading
and has been called Debt Avoidance. The
mean for this item in the Canmore sample
was a high 4.15, but significantly lower
than in the Bornholm sample. The statement
It should be run on purely business principles
loads here, but not significantly. The statement
After making this business a success I want
to start another is negatively loaded here,
indicating it is viewed as being opposite to
debt avoidance.
Who are the profit- and growth-oriented
entrepreneurs?
To identify characteristics of the profit- and
growth-oriented entrepreneurs the starting
point was to create a new variable by summing
the means of the items that formed the Profit
factors (in Canmore these are statements 1,
2, and 9, whereas in Bornholm they are
statements 1, 6 and 9).
Next, a set of independent means t-tests
was applied to search for significant correlations.
In light of the preceding analysis, it was expected
that the Canmore sample would contain
more, and clearly identifiable, growth-oriented
respondents.
In both Bornholm and Canmore, owners
who had purchased their business were sig-
nificantly correlated with the Profit factor. In
Canmore the combined means on the three
Profit factor items were 4.47 for purchasers
(n = 25) and 3.92 for starters (n = 73). In
Bornholm the means were 4.17 for purchasers
(n = 32) and 3.55 for starters (n = 42). Pur-
chasers are apparently more inclined to seek
out the right opportunity, whereas lifestyle- and
autonomy-oriented entrepreneurs are more
likely to start up a small business.
In Canmore, the one type of business
significantly correlated with the profit factor is
restaurant and cafe, whereas B&B owners are
definitely associated with lifestyle and auton-
omy. In Bornholm, accommodation overall is
correlated with the profit factor, while arts
and crafts owners are definitely lifestyle- and
autonomy-oriented. In Bornholm, copreneurial
owners (married couples) were more profit- and
growth-oriented than sole proprietors without
family involvement in their businesses. In
Canmore, owners with children working in their
business were significantly correlated with profit
and growth. These facts show that family
business and profit/growth are in no way
incompatible. Indeed, many sole proprietors are
more lifestyle- and autonomy-oriented.
Surprisingly, previous ownership of a busi-
ness is not significantly correlated with profit-
and growth-orientationin either sample. Gender
of respondents did not matter in Bornholm, but
in Canmore males were significantly correlated
with profit and growth. Female respondents in
Canmore were mostly in the B&Bbusiness (28 F
56 Chapter 3
74
and 6 M), retailing (10 F, 8 M) and tour services
(6 each), while males were more prominent in
hotels (6 M, 3 F) and restaurants (14 M, 5 F). Age
was not a significant discriminator on the profit
and growth factor.
Examples of growth orientation
Most of the respondents in both samples did not
display a growth-orientation. Many small and
family businesses add value to their product in
order to ensure profitability, but very few in
tourism and hospitality actually want to grow
their businesses substantially. Those that plan
for growth, or are best able to deliver it, are
clearly in the minority. These are the owners
that can make a big difference in their commu-
nities and tourist destinations. Some examples
from the interviews in Bornholm (translated
from Danish and paraphrased) illustrate a
growth orientation:
Our business has been a success, as we sell all
that we can produce. We are now establishing
a solid platform . . . to generate a growing sale
over the coming years. We sell our products
outside Bornholm . . . We have increased the
number of employees. We continue to develop
our products to improve our competitiveness.
We find ourselves in a position to increase
business considerably in the future.
(Producer/retailer/exporter of a
speciality food product)
The export (of our craft product) is still growing
all over Europe and Scandinavia, and the
sale to tourists during the season is of great
importance to the firm. To be able to meet
the growing demand we have set up a new
production facility. We foresee considerable
possibilities for more export in the future.
(Producer/retailer/exporter with
over 30 employees)
The owner enjoys seeing a business grow.
Therefore he found it very challenging to buy
the hotel and make it into a profitable business.
He has succeeded, and today the hotel is in a
very fine condition and generating a reasonable
profit and with a still growing turnover.
(Family member who manages the hotel)
Examples of lifestyle- and autonomy-orientation
It is apparent that most of the owners in these
two samples are in these categories. A strong
preference for being ones own boss is common
to both samples, but this in itself is not
correlated with a growth-orientation. Self-
employment can be a facilitator of lifestyle
choices, particularly leisure pursuits associated
with tourism, or can be a reaction against paid
employment. Several paraphrased quotes
translated from the Bornholm interviews are
illustrative of these orientations:
We are in the business because we like it, and
we try to make a living. We are pleased about
our work. We stay open from April to October
inclusive; the rest of the year we paint and keep
the buildings and make bookings for the next
season. Maybe we take some vacation too.
(Owner of a small hotel)
I have only a small business, which I founded
as my health did not allow me to continue in
my (previous occupation). I therefore do not
intend to enlarge my business, as I am pleased
the way it is running today.
(Owner of a small hotel)
My work with horses is my hobby, and it
gives us an additional income to the farm.
The income does not guarantee a big profit
but allows me to combine hobby and work.
(Owner of a recreation business)
Growth entrepreneurs, as they were labelled
by Katz (1995), exist as a minority among own-
ers of small and family businesses in the tourism
and hospitality industry. They exhibit certain
characteristics such as a preference for purchas-
ing rather than starting up their business, and
they can be self-defined by reference to personal
goals and attitudes. These profit- and growth-
oriented entrepreneurs prefer certain types of
businesses that they undoubtedly perceive to
present better opportunities for profit and growth.
What is of great interest is that the profit- and
growth-oriented entrepreneurs are also moti-
vated by lifestyle and autonomy preferences.
They are most likely not to be home-based busi-
nesses such as B&B operators (as in Canmore)
or small hotels and pensions in which owners
live. They are unlikely to be arts and crafts
producers/retailers, as witnessed in Bornholm.
Lifestyle entrepreneurs are also easily
identified in this industry, and they are the
majority. Many of themfit the classic craftsman
label (Smith, 1967), especially the arts and crafts
producers/retailers of Bornholm and the B&B
75
owners in Canmore. In these businesses there
are many more females than males. While B&B
businesses in Canmore created no jobs for
non-owners, and none for children, a few arts
and crafts firms in Bornholm did pursue and
achieve growth. Accordingly, it is generally not
possible to predict growth by reference only to
type of business.
Autonomy, being the desire for self-
employment and control, accompanied both the
lifestyle- and profit/growth-oriented entrepre-
neurs. Almost all respondents wanted business
profitability and preferred hands-on manage-
ment, so these are not good differentiating
factors. Innovation was not found to be linked
to profit- and growth-orientation in this study.
Owners believe they are innovative, but this
does not necessarily mean they create new ven-
tures or grow their business. Much of it is likely
to be in the form of value-adding for greater
efficiency and profit, or artistic innovation.
Regarding Gartners (1990) definition of
entrepreneurship as new venture creation, it is
argued that this viewis somewhat irrelevant. New
businesses in themselves might be of little value to
the community, destination or industry, and might
even generate over-capacity leading to lowered
profitability, less investment, and failure. The
profit- and growth-oriented entrepreneurs in
Canmore and Bornholm were actually more
likely to purchase their businesses, and therefore
conform to Smiths (1967) characterization of
the entrepreneur as being opportunistic.
Antecedents: Where do Family Business
Owners Come From?
Having examined motives and goals in detail, it
is useful to focus on the antecedents: where do
these family business owners come from, what
factors influence them, and are they prepared
for business? First we look more closely at edu-
cational and experiential background, followed
by family, economic, and cultural influences.
Experience and pertinent education or training
In the rural Western Australian sample dis-
cussed earlier, as well as the samples from resort
settings in Denmark and, Canada, it was found
that inheritance of the family business was a
very minor precondition. The inherited compo-
nent was 4.2% of respondents in Australia,
2.5% in Bornholm and none in Canmore.
While the samples appeared to be well
educated, there were no questions asked on
qualifications pertinent to operating a tourism
or hospitality business. Previous business expe-
rience was queried in Denmark and Canada,
and it was determined that 31.2% of the Danish
and 43.4% of the Canadian sample had such
experience. There were no data collected on
the relevance of that experience to their current
operations.
Williams et al. (1989) said that most entre-
preneurs in tourism and hospitality (based on
research in the UK) fell in to one of four catego-
ries: (i) ex-entrepreneurs with relevant job or
educational experience, plus access to capital;
(ii) ex-entrepreneurs with access to capital; (iii)
ex-employees with relevant job or educational
experience, and access to capital; and (iv) ex-
employees with capital. For example, the Shaw
and Williams (1987) study of 411 Cornwall
businesses found that 70% were owned by sole
proprietors. The extent of the owners previous
experience in the tourism/hospitality industry
was very low. Only 4.4% were ex-employers,
while 8.3% were ex-employees in the industry
and fully 54.9% were ex-employees from other
sectors. For most owners, it was their first busi-
ness venture. Shaw and Williams also revealed
the importance of migration from cities to the
country, at least partially fuelled by the higher
costs of urban housing. Asimilar situation occurs
with regard to richer, developed regions/nations
and the economic periphery wherein economic
andlifestyle migrants cancashin andbuy much
cheaper property and businesses where they
want to live.
McKercher andRobbins (1998: 173), based
on data from nature tour operators in Australia,
concluded that most . . . are run by owner/oper-
ators who have no formal business or marketing
background and no prior experience in the tour-
ism industry. A study of 232 small tourism busi-
nesses (all possessing fewer than ten employees)
in New Zealand by Deloitte Touche Tomatsu
(1994, reported in Page et al.,1999) revealed
that almost half had provided 100% of the
start-up capital from personal sources, and only
58 Chapter 3
76
53% had completed a feasibility study. Some
70% had no previous experience in tourism.
Szivas (2001) studied work patterns prior to
entrance into small business ownership in the
tourism industry in two parts of England (inland
Somerset and the City of Coventry). She found
that 106 entrepreneurs (as distinct from paid
workers), were relatively highly educated, but
only 11%hadany formal qualificationintourism
or hospitality. Although mostly not trained for
tourism-related business ventures, this sample
had accepted the mis-match in order to gain
more control over their work, increased job satis-
faction, a better physical environment and a
higher standard of living. In the Szivas study,
20% had owned a business outside tourism and
another 16% had previous self-employment
experience, so about one-third were at least
experienced in business. Fully 35% had worked
solely in tourism as managers or staff over a
10-year periodprior tothe research. The respon-
dents did have viable alternatives, so they were
not unwilling entrepreneurs. Family tradition
was not instrumental in their choices.
The influence of family
The influence of family values and experiences
of entrepreneurship is somewhat controversial.
What kinds of role models do parents make,
especially if they run a family business? Kets de
Vries (1996) considered that family influences
on entrepreneurs were largely negative, leading
to a deviant personality. Such people seek
autonomy or prestige as a backlash to their
upbringing.
On the other hand, many people believe
that family influences encourage entrepre-
neurship. Quinn et al. (1992) surveyed 124
small tourism/hospitality businesses in Northern
Ireland, all owner-managed, and found that
83% were married. There was both a high
percentage of female entrepreneurs and
copreneurs. When questioned on their
motivations for starting a business, the three
most common themes were: fulfilling a life-
time ambition; frustration with previous jobs,
and inheritance of a business. Other economic
choices for women with children were perceived
to be low. Of particular interest was the research-
ers conclusion (p. 13) that The vast majority of
respondents had come from a family where
there had been a tradition of self-employment.
An interesting variation, revealed when
conducting interviews for this book, was the fam-
ily in which two sons both wanted to emulate
their fathers entrepreneurship, but by starting
their own businesses not seeking work in the
fathers. This raises the question of legacies and
inheritance, which is addressed in detail in
Chapter 5.
The influence of economic conditions
The changing nature of work and society in
many countries has resulted in large-scale
redundancies that have led many professionals
from government and business, as well as work-
ers, into business. In many cases these reluctant
entrepreneurs have skills, savings and credit to
assist them. In other situations, social disadvan-
tage forces people into business. For example
Ram and Jones (1998) found that one of the
main reasons that South Asians living in the UK
go into business is blocked upward mobility.
Especially in rural areas, unemployment and
under-employment are factors contributing to
business ventures.
In tourist-receiving societies in less-
developed nations, according to Harrison
(1992), structures inherited from the colonial
period might act against entrepreneurial activity
by residents, or restrict them to specific sectors.
In-migrants (often retiring in a new location) or
returning migrants often dominate the entre-
preneurial class. Local elites are often favoured
in developing business links with international
tourism firms, and these elites might stem from
racial or ethnic differences.
The influence of return migration on entre-
preneurship in tourismand hospitality was stud-
ied by King (1995). He observed that returning
migrants, typically frommore- to less-developed
economies, could bring back capital, skills and
attitudes favouring business investment. These
small business owners do not want to return to
farming or other poorly perceived jobs. The
south of Europe and west of Ireland were given
as examples of regions where this phenomenon
had been observed. An earlier study in Nazare,
Portugal, by Mendonsa (1983) clearly illustrated
this pattern.
77
The influence of culture
Culture influences entrepreneurship in general
and family business specifically. Some cultures
are more open to personal and family business
initiatives, while among others the establish-
ment or inheritance of a family business is
either shunned or encouraged. Morrison (1998)
explored cultural influences on entrepreneur-
ship and suggested that the entrepreneurial
culture featured power distance, individuation
and masculinity, uncertainty avoidance, and a
long-term versus short-term orientation.
Business Planning for New Family
Businesses
A handbook prepared by the Queensland
(Australia) Tourist and Travel Corporation
(1993: 11) for people setting up tourism busi-
ness noted that one-third of all new businesses
fail in the first year, and two-thirds fail by the
fifth year. Tourism Victoria (no date), in its
handbook Starting Up in Tourism, asks readers
why they want to get into tourism and if they
are the right type of person for the task. Poten-
tial entrepreneurs are advised that it often takes
years to generate a profit, it will probably take
more hours of work than any office job, guests
can be very demanding, and privacy will be
scarce. Readers of the Tourism Victoria docu-
ment are asked (p. 4): Have you considered
how your tourism business will affect your fam-
ily? These, and other advisory documents pre-
pared by tourism agencies around the world,
seek to instil a sense of realism, and hopefully
prevent future business disasters.
Failure has been linked to the absence of
business planning. Given that a majority of fam-
ily businesses in this industry are lifestyle- and
autonomy-oriented, it is nowonder that a minor-
ity actually undertake formal business planning.
Elements of the business plan
A business plan should ideally be formulated
before deciding on a business purchase or
start-up, both to test its feasibility and (if
desired) to help raise capital. It can also be
completed alongside the strategic plan or in
anticipation of an expansion. Once formulated,
it becomes a working tool and should be
updated periodically.
The main elements of a standard business
plan include:
Business concept, goals and objectives

(perhaps emphasizing innovation or any
competitive advantages).
Profiles of the owners/purchasers and their

qualifications including past performance
in this or other businesses.
Personal or family equity to be invested.
Other capital (loans or investments)

required for start-up/purchase, and for
development.
Security or collateral offered against loans

(the family land or house?).
Market appraisal (target market segments,

market share calculations, marketing strat-
egy, the marketing mix especially price).
Development plan (staffing, value-adding,

growth, diversification).
Marketing plan and demand forecasts for

target market segments.
Operations plan (suppliers, equipment,

facilities, maintenance).
Earnings and cash-flow projections and

profit/loss calculations by year (510 years
in advance).
Pay-back plan for debt; return on

investment to investors (if any).
An operating budget.
Conclusions as to feasibility and

desirability.
A family-business perspective
A business plan must reflect the family vision
and the owners values. For many family busi-
ness owners, plans will not be shaped around
borrowing money and its repayment, as debt is
to be avoided, but around realistic financial
forecasts and an operating budget. In more
complex situations involving investors or sub-
stantial debt, the repayment and/or dividends
schedule based again on realistic financial
forecasts can be the crucial element.
A good business plan contains a feasibility
study, and for many family business owners this
60 Chapter 3
78
entails a cost-benefit evaluation encompassing
many intangibles, rather than a straightforward
determinationof profitability. In other words, the
final decision to proceed with the investment or
purchase requires a conscious decision about
how much lifestyle, autonomy and location are
worth.
Cash-flow forecast
This financial tool is pivotal in feasibility studies
and should be included in business plans of all
kinds. It shows a multi-year period for which
revenues, costs and net income are forecast.
Assuming that costs can be forecast accurately
for each operating unit (e.g. rooms, marketing,
administration, food and other supplies), the
most likely source of inaccuracy and hence
business failure is that of projecting demand
and revenue. It cannot be done realistically
without careful analysis of the markets, present
and future competition, and profit margins.
Consultants can be asked to provide their
objective assessments, and they typically rely
on a combination of published industry
performance standards in combination with
their experience and original research.
Cash-flow forecasting is also useful on a
yearly and monthly basis, especially to indicate
exactly when any shortfalls will occur. This form
will resemble the business ledgers and bank
accounts in tracing all movements of money.
In tourism and hospitality, the seasonality
of demand, and other short- and long-term
demand cycles, make it difficult to sustain good
cash flow over the entire year (see the section
on seasonality-related strategies in Chapter 4).
Families can be particularly hurt when cash
runs out, thereby necessitating good overdraft
arrangements with a local banker. They also
have to exercise restraint when cash pours in
during the busy periods, as much of it has to
be put aside for future payments or planned
reinvestment.
Capital (financing the family business)
Where do family business owners get the
money to start and, if desired, grow their busi-
nesses? Capitalization clearly sets family owner-
ship apart from corporations because the risks
of failure are often borne directly by the owners
and their families. As well, the desire or need
to raise money externally always has to be
balanced against the risks of losing control
of the business or worse losing the family
legacy of land or house.
There are generally a number of options
available to any investor or entrepreneur. Per-
sonal and family savings or loans from relatives
no doubt are at the root of many small business
start-ups. Borrowing from institutions is often
necessary, and usually some form of collateral
(e.g. the family house or farm) is required. Get-
ting business loans without collateral could be
difficult, so personal, unsecured loans and over-
drafts might be the only option. Venture capital
markets are a possible source, but not likely for
most of the small family businesses in tourism
and hospitality. Venture capitalists look for com-
panies promising rapid growth in profits and
invest directly in their ownership.
Once a business is operating there are addi-
tional options. Retained earnings are often the
preferred source of capital, but many small busi-
nesses never generate enough cash-flow or cor-
porate profits for re-investment or newventures.
Finally, some family businesses take the form of
partnerships with equity brought in from out-
siders, or with growth they might obtain a public
listing and sell shares on the stock exchange.
Several researchers have discovered that
the bulk of family-business capital in tourismand
hospitality comes frompersonal sources, includ-
ing savings and the resources of other family
members. Hankinsons (1989) report on small
hotel owners in England documented an almost
equal combination of personal funds and bank
loans for financing their investments, but owners
reported being reluctant to incur debt. They also
had no system for appraising investments, such
as a discounted cash flow calculation.
The study of tourism and hospitality busi-
nesses in Cornwall by Williams et al. (1989) deter-
mined that personal and family savings were the
main source of capital used, and the only source
for 50%of the entrepreneurs sampled. The major
study of small tourism and hospitality businesses
in the UK (Thomas et al., 1997) clearly revealed
that personal funds, bank loans and bank over-
drafts were the most common sources, whereas
venture capital, partnerships, equity issues and
other sources were used by a small minority. It
79
was also found that 56% of the small business
owners relied on personal capital for the funding
of business development initiatives.
Ozar and Yamak (1997) reported on a
study of small hotel owners in Istanbul, Turkey.
They were largely (80%) self-owned in terms of
both buildings and land, and their initial capital-
ization was mostly through personal sources
and informal arrangements. Institutional debt
was rarely used, and ongoing operations were
financed mostly by cash-flow from the hotels.
Margerison (1998) concluded that more
research was needed to determine if formal busi-
ness planning really was necessary, or could be
linked to improved performance, in small tour-
ism and hospitality businesses. It is possible that
many owners do not adopt formal methods
because they do not have to report to anyone,
not because they are incompetent or disorga-
nized. It is also possible that owners need advice
and technical help, but do not get it because
they are completely wrapped up in operating
their businesses. Growth-oriented entrepreneurs
might be more inclined to engage in formal
business planning, if only because they need
external sources of capital tofuel their ambitions.
Ownership, Organization and
Governance
Ownership forms and enterprise organization
are closely linked to capitalization. When mostly
personal resources are used, which is typical
of lifestyle- and autonomy-seekers, it is likely
that the start-up business will be small, owner-
operated and informally organized. The owner
or copreneurs will do most of the work. On the
other hand, profit- and growth-oriented entre-
preneurs are more likely to purchase a larger
business, are not afraid of debt, and will employ
professionals as needed. The larger the firm, the
more it requires formal management systems
including human resources and financial
controls. Older, larger family firms might elect to
appoint boards of directors incorporating non-
family experts (see the OReillys Guesthouse
Case Study in Chapter 8).
Carlock andWard(2001: 119) identifiedsix
possible ownership configurations for the family
business. These are linkedto the life cycle but not
necessarily in a linear manner:
Entrepreneurship
Owner-managed
Family partnership
Sibling partnership
Cousins collaboration
Family syndicate
The cases studied in this book, and the various
research findings, show that in tourism and
hospitality few family businesses will progress
into the more complex configurations involving
different branches of the family. The OReilly
case, however, illustrates one that has advanced
to a more complex stage involving multiple
generations.
Observed ownership forms in tourism
and hospitality
Basic ownership choices for family business
start-ups in tourism and hospitality include
a number revealed during the Australian,
Canadian and Danish research and in case
study preparation:
The business is entirely secondary to

the home, farm or other enterprise (i.e.
no separate ownership).
Sole proprietorship (one owner, but family

are often involved in operations).
Copreneurial (joint ownership by couples).
Partnerships (among family members or

involving outsiders).
Companies with shareholders (to limit the

individual liability of owners, and to help
generate investment).
Family trusts (a legal corporation with

shares owned by family members).
Ownership and control should not be
confused. As the family business grows it often
becomes desirable or even necessary to employ
professional managers, establish a board of
directors, and rely increasingly on non-family
expertise. The founders might eventually turn
over day-to-day control (as opposed to gover-
nance) to the professionals. If family businesses
get large enough to form publicly-traded
corporations, retaining family control becomes
a major issue because of the risk of a take-over.
Over time, ownershipshares canget smaller
and smaller if each family owner passes on
62 Chapter 3
80
shares equally to all descendants. This could
make control difficult, especially if all family
shareholders are supposed to vote. An alterna-
tive is to make ownership and/or voting rights
conditional upon employment within the com-
pany, with an ownership agreement stipulating
that all shares be redeemed upon death or
retirement.
Geeraerts (1984) found that family-owned
and -managed businesses in The Netherlands
tended to be less horizontally differentiated
(i.e. fewer divisions), less formal and with
less specialization. Daily and Dollinger (1992)
studied manufacturing firms and determined
that family-owned businesses were smaller, less
growth-oriented, relied less on internal control
mechanisms, and achieved lower levels of
performance. Organization and management
systems in family-owned tourismand hospitality
businesses have not been studied in any system-
atic comparison, but it is suggested from avail-
able research that the majority are micro and
small in size, owner-operated, informal and do
not employ professional staff. A study focusing
on larger family-owned firms in this industry is
therefore warranted, especially when it has been
noted elsewhere that more children are involved
in the larger businesses.
Governance
In the early stages, and for most businesses
studied in this book, ownership, governance
and management are all in the hands of the
founders. But while a person or family can own
a business and elect not to be involved in its
management, they are always involved in its
governance.
In the Carlock and Ward (2001) scheme of
parallel family and business planning, a board
of directors oversees management actions,
allocates capital and participates in strategy
formulation. On the family side a family council
provides the governance structure, leadership,
and coordination of family actions.
An ownership agreement can be formu-
lated to shape the ownership and governance of
the business in accordance with the family vision
and circumstances. Who can hold shares or
stock? Can shares be sold, transferred or inher-
ited? What rights accompany various forms of
ownership and employment (e.g. voting, board
membership, dividends)?
Liquidity can become a serious issue, as in
the case where family shareholders suddenly
need cash but their shares cannot be soldoutside
the family or family trust. Terms and conditions
have to be established for internal sales or
buy-backs.
Boards of directors
Many authors have recommended the
establishment of a board of directors and
use of non-family, professional directors to help
resolve conflicts and instil greater professional-
ism. But Sharma et al. (1996) believed there
was insufficient research evidence to confirm
the imputed benefits.
The supposed advantages, summarized in
Sharma et al. (1996: 12), include:
Fresh perspectives and new directions;

catalysts for change.
Objectivity and fairness.
Arbitration of disputes.
Support for new leaders/successors.
Moral support and sounding-boards for

owners.
Others have argued that non-family direc-
tors might have little knowledge of the family firm
and are only available at meeting times. They
might also be beholden to the owners who
appointed them, and if they do not have a direct
stake in the business their commitment to it
might be low.
Boards will consist generally of key family
members and senior professional managers, and
often external experts. They are to be elected
by shareholders and therefore responsible to
owners. Carlock and Ward (2001) said that the
ideal board of directors for a family business
has a majority of independent, non-family mem-
bers and appoints its own chairperson, but that is
likely to be controversial for many families.
Alternatives to the board of directors
include the use of professional advisers on a
topical, as-needed basis (e.g. accounting, tax
planning, succession), and creation of a formal
advisory committee.
81
The family council
In small, informal family businesses, regular
meetings or even casual conversations are the
basis of coordination and planning. As it grows
and develops, formal meetings are likely to be
necessary, complete with minute-taking and
agendas. To coincide with governance each
member of the council would have to be a
shareholder, but the participation of children
and others without shares might be advanta-
geous in discussing strategic planning and
workfamily issues.
The family trust
Depending on laws of the land, many families
have created family trusts. The case study of
OReillys in Chapter 8 illustrates some of the
pros and cons of trusts. On the one hand they
preserve family ownership and control, prevent-
ing family members from cashing-in their
shares. As a consequence, despite increasing
numbers of generations and descendants,
everyone knows that OReillys will endure and
individuals can elect to work in the firm or
not. On the other hand, there might arise some
opposition, or even resentment, where family
members cannot benefit from their inheritance
except by taking employment in the company.
Chapter Summary
Start-up is the most critical stage in the family
business life cycle, because most will not grow
substantially and the level of inheritance is mini-
mal. The motivations and goals of founders are
critical in setting the future of the family busi-
ness, with the majority being established for
lifestyle rather than traditional entrepreneurial
reasons.
Our in-depth research into motivations and
goals in several countries revealed the predomi-
nance of lifestyle and locational motivations, as
well as the strong desire for autonomy (i.e. to be
my own boss). Across the industrialized world
numerous individuals and couples are moving
into rural and resort areas to establish small and
micro businesses, with living in the right envi-
ronment high on their list of locational criteria.
Apparently the incidence of business inheritance
in these settings has declined to the level of
insignificance, and migration is the dominant
force. Most of the family business founders are
individuals or mature couples, often getting into
a second career, although there are still cases
of farmers starting tourism and hospitality
businesses as a secondary income source.
We have also been able to identify profit-
and growth-oriented entrepreneurs in our
research and case studies owners who are
easily differentiated in their response to the
simple statement I want to keep this business
growing. They are more likely to seek out
opportunities and purchase larger businesses
(typically hotels and restaurants, not arts or crafts
and not B&B establishments), often employing
borrowed money and setting up formal compa-
nies or corporations. They are also motivated by
the same lifestyle and locational preferences, but
they are the ones who can be expected to grow
the business and generate new jobs. Although
many family businesses claim to be innovative,
we found that much of this was in terms of
value-adding and improving the quality of the
business.
Antecedents to establishing a family busi-
ness in this industry were also examined. There
is good evidence in the literature and our
research data that a majority do not have previ-
ous, directly relevant ownership experience, but
that many do have some experience working in
the industry or running other types of business.
Because capital is required, or credit worthiness,
there is a direct connection to land ownership
(farmers in particular), and migration either
moving from high-cost to low-cost areas, espe-
cially from large cities, or returning international
migrants with savings.
Numerous assistance programmes have
been directed at the tourism and hospitality
sectors, especially in peripheral areas and devel-
oping nations, and towards small businesses
in general. But is there a case to be made for
specific support for the family business in tourism
and hospitality? We return to this policy issue
in the final chapters. The final section of this
chapter provided advice on business planning,
and a number of related family business issues
are discussed under the headings of ownership,
organization and governance.
64 Chapter 3
82
A4751 - Getz - 082.prn
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66 Chapter 3
84
4
Sustaining and Developing the Family Business
Introduction
Growth is not the preoccupation of most family
business owners. Simply sustaining the business
is challenging enough and while growth is not
necessary, some kind of development is inevita-
ble all businesses change. The change process
can be managed to add value to the business
and improve the familys lifestyle, or it can be
imposed by external factors.
The first section examines the meaning of
success and failure for a family business, then
focuses on specific challenges and causes of
failure. Next, arguments for growing a business
are addressed, then preconditions and barriers
to growth. This is followed by analysis of generic
and industry-specific strategies, a sectionon stra-
tegic planning, and separate treatment of strate-
gic marketing and family branding. Research
findings are then presented on how seasonality
affects family businesses and various strategic
responses froma sample of owners inDenmark.
Failure and Success
The rate of failure among small and family
businesses in general is high. Dunkelberg
(1995) said that 67% of new, small businesses
in the USA had failed within the first four years.
Nilsson et al. (2004) noted that a high rate of
business failure is typical of small and medium-
sized enterprises. They referred to a rule of
thumb that indicates only one-third will be
successful, one-third will struggle (and could go
either way) and the other third should not be in
business in the first place! According to Boer
(1998), several studies in the UK confirm that
newer firms fail at a higher rate, but there was
no compelling evidence regarding tourism and
hospitality firms in particular.
In one early study, Shaw and Williams
(1987) determined that 60% of hotels and guest
houses in Looe, Cornwall, had new owners
within the last 2 years, and 28% had been in
operation for 2 years or less, so turnover of
ownership was very high. Shaw and Williams
(1990), in their study of Cornwall, observed
many tourism/hospitality businesses with little
capital and weak management that were resis-
tant to change or taking advice. These research-
ers also concluded that many owner-operators
lacked experience, and used mostly personal
and family savings as their capital. Remaining
small and often unprofitable was a chronic
condition in the small-hotel sector. Market
fluctuations gave rise to many outright failures.
In a Swedish study, Klenell and Steen
(1999) correlated lifestyle and the desire not to
growwith insolvency. On the other hand, Brown
(1987) suggested that owner-operators have an
emotional attachment to their businesses that
makes them reluctant to abandon the enterprise
in difficult times. Because many tourism and
hospitality businesses are not the primary or only
source of family income, poor performance
is perhaps a more typical occurrence than
outright failure. Studies of B&Boperations in the
American Midwest (Dawson and Brown 1988;
85
Gruidl et al., 1990; Boger and Buchanan 1991)
revealed widespread low occupancy rates and
poor gross revenue. This can be tolerated by
many families, but only if they do not depend on
the tourism income.
In purely commercial terms, failure is easy
to define: the business does not realize sufficient
profit to reward its owner(s) adequately and is
therefore closed or sold or faces outright bank-
ruptcy. Success is generally defined in terms of
making a profit, growth (in market share, size of
the firm, or share value if publicly traded), and
even its ultimate sale price. But these measures
are not always appropriate infamily businesses.
What is failure and success?
Success and failure in family businesses can
best be evaluated against the owners needs
and goals. In terms of expressed goals of family
business owners, obtaining or sustaining profit-
ability is generally ranked highest (Davis, 1996),
followed by increasing the value of the business.
A study by Tagiuri and Davis (1992) found that
the top goals were to make profits now and
(equally) to achieve excellence.
For some small hoteliers in England, the
owners measure of success was survival
(Hankinson, 1989). If the business at least
supports the family, it can be considered a
success. If it never grows, but meets all goals of
the owners, it can also be considered a success.
Failure, on the other hand, is not necessarily
implied by low profitability, nor by selling or
even terminating the enterprise.
Dunn (1995) examined success themes
in Scottish family enterprises, finding that
definitions of success provided by owners incor-
porated both objective and subjective criteria.
Their definitions centred on achieving quality,
the creation of jobs and wealth for family and
non-family, sustaining and building the familys
reputation within the industry and community,
and keeping the business healthy and profitable.
What created success? Dunns respondents
identified family values, family dynamics and
responsiveness to change as the main success
themes. Family values included caring and
loyalty to staff and customers, quality enhance-
ments, maintenance of family ownership and
control, stewardship of wealth and employees
well-being, work guaranteed for family
members, and preserving the family name
and reputation. Family dynamics included
good quality work and home relationships
(consensus-building), and responsiveness to
change covered cautious containment of growth
and a long-term perspective on payback.
The matter of a legacy arises here, as in
some cultures and families it is considered very
important to pass on the family land and/or
business to future generations. Other founders
might hope that their efforts will be of value and
interest to their descendents, so that a family
legacy can be created where none previously
existed. But most children probably do not share
their parents dreams and have little interest in
taking over a family business especially one
that promises hard work and small returns.
A further complication is that family busi-
ness goals often extend beyond their personal
family and business circumstances. Ateljevic and
Doorne (2000), from a review of research find-
ings in New Zealand, concluded that a number
of pioneering, lifestyle-oriented entrepreneurs
possessed social and cultural values that shaped
their business. For example, in parts of New
Zealand operators of adventure or ecological
activities and tours had moved to areas for
their own lifestyle reasons but had established
businesses that could be described as possessing
a strong community and ecological ethic.
Furthermore, these pioneers had proved that
niche markets were viable, thereby attracting
copy-cat businesses.
Again taking a community or destination
perspective, it has to be asked if the niche
markets occupied by family businesses are in
fact restricted to them because of their small
size, hands-onfamily service, lifestyle orientation
(profits and growth not being paramount) and
concern for social and environmental sustain-
ability. If so, the family business might be the
only way to foster tourism and economic devel-
opment, especially in rural and peripheral
regions. In these circumstances, the success
of family businesses has to be at least partially
evaluated in the context of how they collectively
contribute to creating tourist attractiveness, or to
its gradual growth and diversification. In other
words, each small family business has a part
to play in establishing and sustaining the
68 Chapter 4
86
destination. For the community or destination,
a high turnover of family businesses (most
are purchased by other owner-operators) can
result in the absence of stability, innovation and
growth, and this might be viewed as a negative
phenomenon.
When a family business fails, both the
business and the family are in jeopardy. There
has been little said about this problem in the
literature, and in fact generic business failure
in tourism and hospitality has not been well
researched (Leiper, 1997). It could be argued
that as much can be learned fromcase studies of
failed businesses as from successful ones.
Causes of failure
Small business failure is an under-researched
problem, according to Boer (1998). Failure
might take the form of bankruptcy, under-
performance or voluntary termination. Reasons
for failure can be exogenous (e.g. environmen-
tal forces) or endogenous (poor management).
Boer discussed possible sources of failure for
small tourism and hospitality business in
general. Poor management might be blamed
on the owner/entrepreneur in most cases,
owing to the high incidence of owner-operated
ventures. This is especially pertinent in tourism
and hospitality where so many entrants are not
experienced in running a business or in the
industry itself. Owners themselves are likely to
be biased in their assessment of problems, and
might tend to blame external forces beyond
their control.
Pizam and Upchurch (2002: 136) com-
mented on failure in the rural tourism sector:
Clearly, the combination of financial, market-
ing, human resources, rules and regulatory
knowledge, service management, and manage-
ment is rare combination for the small rural
entrepreneur to possess. They went on to
catalogue specific failure causes:
Lack of proper capitalization.
Poor identification of a specific target

market.
Insufficient advertising and sales

promotions.
Lack of understanding of service dynamics.
Inability to compete in a trading area.

The UK National Survey of Small Tourism
and Hospitality Firms (Thomas et al., 1997)
questioned respondents on obstacles to
improved business performance. This gives
some insight into problems facing the industry in
general, but no specific information about family
businesses. The survey found that intense local
competition and direct costs (rent, labour and
taxes) were the greatest causes of concern.
Government regulations were another general
area of worry.
Under-capitalization is commonly viewed
as a major reason for business failure, and this
would appear to be particularly relevant to the
family businesses sector where personal funds
underpin many business ventures. A related
problem is the lack of working capital to keep a
business going. Seasonal variations in demand
result in periodic cash-flow shortages. Small
businesses are highly vulnerable to deferred
payments by customers, yet might be required to
pay cash, or prefer paying cash, for their own
supplies. Inflation, increasing interest rates and
economic recession can all have a strong impact
on the small firm. Pizam and Upchurch (2002)
pointed to low levels of profits in the B&B and
farm-based accommodation sectors as being
responsible for inadequate working capital.
Boer (1998) distinguished between hotels
and catering firms in their vulnerability to poten-
tial causes of failure. Hotels, he argued, have
a tendency to be more capital intensive, with
higher initial investments, longer-term loans,
and a longer payback period. They will have
higher fixed assets (more are owned, as opposed
to leased premises) and higher fixed costs. They
might be more susceptible to cash-flowproblems
because they extend credit to customers.
Seasonality might also affect accommodation
establishments more than those in the catering
business. This means that hotels might have
inadequate working capital, even where prop-
erty assets are substantial. Another factor is that
the banking sector holds considerable sway over
hotels financial health, so a credit crunch hurts
them more.
Boer also addressed owners views (from
Dorset, UK) on what led to long-term success,
separating the hotel and catering sub-samples.
Most factors were endogenous, that is, within
their own realm of control. Reputation and
giving value for money were important to both
Sustaining and Developing the Family Business 69
87
groups of owners. The hotel sample placedlower
emphasis on cash needs and cost control,
perhaps because of the catering sectors need
for constant inventory replenishment. Other
common success factors were location, skills,
and luck. The hoteliers also attributed success to
good customer communications, low borrowing
needs, access to other finance, and limiting the
firms growth. Caterers also attributed success to
having good suppliers and staff.
Taylor et al. (1998: 59), in discussing the
financing of small tourism and hospitality
businesses, concluded that debt finance should
be used cautiously by these firms. Apparently
many owners understand the need for caution
because they tend to be very debt-averse,
taking it on only when absolutely necessary.
Consciously or unconsciously they are sacrific-
ing growth potential and increased quality for a
less risky strategy. This might be a reasoned busi-
ness decision, given the certainty of economic
cycles, or merely an innate conservativeness.
What researchers have not been able to discern
is whether this aversion to debt is in itself a cause
of failure inthis industry. As discussedelsewhere,
many small businesses are inherently too small
to be successful.
Research from Ireland (Hegerty and
Ruddy, 2002: 19) correlated success and failure
in small tourism/hospitality businesses with
levels of support provided to them. Froma large-
scale survey they calculated a failure rate of one
in six for sole-proprietor businesses, compared
to one in seven for copreneurial businesses and
one in ten for businesses involving more family
members. Although the study did not explicitly
cover previously failed businesses that could
not be reached, this intriguing finding raises the
hypothesis that having a family in business is a
positive factor in ensuring success.
Another complication is the familys willing-
ness and ability to withstand tough economic
times in order to sustain their business and life-
style. When more profit-oriented entrepreneurs
would fold their tents and try again another time
or place, is the family more likely to stick it out?
Theoretical perspectives on failure
Many authors clearly believe that most failures
are due to managerial incompetence or lack of
fundamental assets. Indeed, the prevailing
wisdom of management experts is that owners
and managers make their own success or bring
failure upon themselves. Popular competitive-
ness models such as that of Porter (1980,
1985) encourage this belief. Entrepreneurs are
encouraged to develop competitive advantages
and take control of their future. This is good
advice, but does it ensure success?
Population ecology (see, for example
Hannan and Freeman 1977, 1984) suggests that
individual businesses are at the mercy of broad
environmental forces, and that competition for
resources guarantees that only some will survive.
This is small comfort tothe owner or investor, but
from a community, industry or destination
perspective it makes a lot of sense. The fact
that some small businesses are failing is in itself
normal and to be expected. The result could be
increased quality and competitiveness. Indeed,
some authors have gone so far as to suggest that
weak businesses be denied support.
When a familys livelihood is at stake,
failure should not be taken lightly. More research
has to be directed at determining failure and
success factors for the family business in tourism
and hospitality, because it is not currently
possible to make predictions about these
matters or even to weigh all the consequences.
Growing the Family Business
A 1997 study of high-growth, family businesses
in Australia (Smyrnios et al., 1997) character-
ized this sub-set as being younger in age, having
younger owners, possessing more formalized
management structures, involving proportion-
ately fewer family members in management,
and showing less family control. One is left with
a distinct impression from that research that
growth-oriented owners must make their busi-
ness less family-oriented and more professional.
Indeed, the principal objectives of family
business owners in Australia, and especially
those of first-generation owners, were to
accumulate wealth, increase the value of their
business, then sell it at an appropriate time.
While their sample was much broader than the
tourism and hospitality industry, these conclu-
sions might very well hold true across all family
businesses.
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Most family businesses in tourism and
hospitality remain small, primarily for lifestyle
and autonomy reasons, but also in many cases
because they lack the capacity to grow. Nor
do most of them professionalize by hiring staff
the owners prefer to remain hands-on. Most
owner-operators do want to increase their profit-
ability, and this usually leads to a value-adding
strategy, carefully balancing the desire to remain
small and controllable with the need to increase
return on effort. Only a small minority of
entrepreneurs in tourism and hospitality do
want to grow their businesses, and this requires
strategic planning for financing, ownership,
organization and management.
Owners with children or other family
members who want to be involved in the
business have additional challenges: of getting
theminvolved; balancing the needs and goals of
potential future owners with the original motives
and goals of the founders, and preparing for
possible succession. Along the way, numerous
family issues will have to be resolved, not the
least of which is deciding how much money to
take out of the business for family needs, versus
reinvestment.
Why grow the family business?
Research on growth-oriented family firms was
thought to be almost non-existent by Sharma
et al. (1996), yet Ward (1987) and Poza (1988)
argued that growth is necessary for family firms
in order to ensure their survival. The US Small
Business Administration (cited in Tagliuri and
Davis, 1992) noted that growing companies
had a lower percentage of failure than
non-growing ones.
There are two basic arguments for growing
a family business. The first is economics, namely
the need to have sufficient revenue and cash-
flowto remain viable and generate profits. Many
micro and small businesses in the tourism and
hospitality industry are too small ever to be
profitable or even to survive. They start out too
small and remain that way until the owners
realize it is fruitless to continue. Factors that
contribute to this common size challenge have
already been discussed; primarily a lack of
sufficient start-up capital, the pre-eminence
of family and lifestyle goals, and the desire to
retain hands-on control.
The B&B business is a clear example.
Dawson and Brown (1988) concluded from
research that B&B operators in the American
Midwest had to spend money on promotion,
remain committed to the business, add more
rooms and offer private bath facilities in order to
increase gross revenue. Pizam and Upchurch
(2002) concluded that B&B establishments had
to have more than eight rooms to generate a
profit. Unfortunately, most operators never have
this potential space nor the capital to grow their
modest accommodation business.
It should also be noted that legislation
in many areas limits the B&B and other rural
accommodation establishments to unprofitably
small sizes. Examination of regulations applica-
ble to small businesses is therefore essential as an
industry priority. The second basic reason for
growing the family firmis to create opportunities
for children or other family members, particu-
larly if inheritance is a real prospect. Small busi-
nesses generally lack either the income potential
or challenge necessary to attract and maintain
the interest of children and especially heirs. As
well, the business assets in tourismand hospital-
ity are often tied up with the family home or
farm, making separation difficult or impossible.
Children might want to inherit the property, but
not continue the business.
Growth and innovation
Upton et al. (2001) defined fast-growth family
firms as . . . those that are willing to take risks,
to be innovative, and to initiate aggressive com-
petitive actions. But what exactly does it mean
for a family business to be innovative? Litz and
Kleyson (2002) argued that intergenerational
dynamics must be examined, as innovation
can die out with the family firms founder,
or start again with the children. They asked
if innovation is a product of family interaction
or individual effort. Is it intentional (i.e. do
innovators set out purposefully to be creative
and change things) or is it serendipitous (i.e. the
product of one-time inspiration)?
Little innovation is evident in the pur-
chasing of established businesses in existing
89
destinations, nor is innovation evident in most of
the lifestyle-oriented businesses where growth
is not pursued. Russell (1996: 116), based on
tourism-industry research in Ireland, concluded
that the pursuit of innovationwas not an integral
part of most enterprises surveyed and where
innovations were claimed these happened to be
essential business investment. In other words,
Russell found that the owners were only doing
what had to be done, not creating new products
or markets. Nor was the business climate at that
time supportive of innovation in the tourism
industry. A truly innovative culture, according
to Russell, would see higher professionalism
among business owners/managers (especially
in preparing business plans, adopting a
marketing orientation and deliberately foster-
ing innovative ideas), better educational
opportunities and market information, more
sharing of ideas through international contacts
and travel, and better support from government
agencies.
Innovation and networking
Networking is especially important for small,
family businesses, both in terms of extending
their marketing capabilities and in fostering
innovation or at least in encouraging the
diffusion of innovations (Morrison, 1996,
1998). Networking of a formal, business-to-
business type can be facilitated through the
efforts of industry associations and destination
marketing organizations. Beyond that, owners
will be able to develop their own social
networks. The family business has a unique
potential advantage in this respect, although
many family firm owners do not exploit it.
They might have deliberately chosen to break
off family ties, or their locational preferences
might have made it difficult to sustain them. As
a family gets established in an area it might
become possible to rely more and more on the
extended family for support and ideas.
Ethnicity can play an important role in
family business networking. Saker (1992) noted
that it is family and community that lie at
the heart of the ethnic firms social network. A
strong social, particularly ethnic network can
provide financial and moral support, but it can
also limit innovation if external influences are
neglected.
Preconditions and Barriers to Growth
For most businesses the main precondition for
growth is resource availability, either those of
internal origin (e.g. savings, other assets such as
land) or external (e.g. investors, loans, grants).
For the family firm, the foundation is a desire to
grow and the commitment to make it happen.
In a family business one of the common dilem-
mas faced is that of reinvestment in the business
versus taking resources out for immediate fam-
ily use and personal wealth creation. Families
often do make sacrifices in order to ensure their
business becomes and remains successful, but if
there is no long-term vision for the business,
what is the incentive to reinvest in it?
The resource-basedtheory of the firm (e.g.
Barney, 1991) holds that a business is comprised
of its resource bundle, and these are uniquely
shaped by ownership and management inten-
tions. The resources held by a family firm can
consist of the tangible (i.e. financial capital,
information systems, products) and the intangi-
ble (i.e. knowledge, skills, brand assets). Atten-
tion must be given to the resources owners can
control, and to how they are actually deployed.
Many family businesses are foundedon personal
sources of capital that are often inseparable from
family assets such as the house or land. Others
have little in the way of tangible assets and rely
on personal knowledge.
A related theory, the knowledge-based
view of the firm (e.g. Nonaka, 1994), holds that
businesses are a collection of tacit knowledge
(firm-specific) and explicit knowledge (avail-
able to all). In family businesses it must be asked
what tacit knowledge is held by the owners and
their families, and to what extent does it provide
a competitive advantage? Does it increase
or diminish over time, especially through
the succession process? Many tourism and
hospitality-related entrepreneurs rely heavily
and sometimes exclusively on personal skills to
ensure business success. They might be nature-
tour guides who possess intimate knowledge of
a natural area and its wildlife, or arts and crafts
producers with creative talents. But all these
personal sources of knowledge are potentially
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90
shared by many, or can become general knowl-
edge over time, thereby eroding competitive
advantages.
From either theoretical perspective
resource- or knowledge-based views of the firm
many family businesses in tourism and
hospitality are essentially weak. They have
neither the resources, the desire nor the
knowledge to innovate or grow.
Storey (1994) identified a clear association
between limited company status and fast
growth, but it was not clear which came first. Do
growth-oriented entrepreneurs seek company
status in order to raise capital and protect their
own assets? He also identified common barriers
to growth, specifically lack of motivation, limited
financial resources, lack of skilled labour, and
government controls. These, and other barriers
noted by Poza (1988) are now discussed.
Lack of motivation or vision
The family vision, placing personal or family
needs ahead of growth, or placing autonomy
and hands-on management above growth
potential, results in a very widespread lack of
ambition to grow family businesses. But there is
another kind of vision problem, rooted in the
inability to see real opportunities that might be
realized even within the scope of the family
vision. Owners can be educated or at least
encouraged to think beyond the box, par-
ticularly by examining other family-business
success stories. This is where many entre-
preneurship and small business programmes
fail, because they need first to recognize the
dominance of the family vision and how it
constrains innovation and growth. The best
people to undertake the training might be
successful family business owners, backed by
best practice case studies.
Failure to communicate
Poza (1988) argued that maintaining distance
from customers, employees, the competition, or
family could impede growth. This is not just
a matter of information flow or market intelli-
gence, but also a behavioural and cultural issue.
Finances
Having large overheads and poor cash-flow
prevents many owners from saving money for
re-investment or growth. Are there ways to
grow a family business without incurring a risky
debt-load or giving up family control? Again,
these options have to be placed before the
owners and their families for consideration
and weighing of the costs and benefits. At a
minimum, practical value-adding investments
must be demonstrated, especially where new
technology is involved. Indeed, financial assis-
tance offered to establish or grow family busi-
nesses in tourism and hospitality is often going
to miss the mark, whereas concrete help with
technology and other value-adding systems
(such as yield management, relationship
marketing or inter-business networking) could
have tremendous results.
Family impasse
Families might not be able to resolve their
internal needs and goals, thereby falling into a
non-growth option by default. This is the exact
place and time for outside advisers to make an
impact. It might be a simple matter of getting
family members to share their ambitions and
fears, or it might involve strategic and financial
planning in depth.
Market area
Most small and family businesses rely on local
or regional customers, as they lack the means
to reach farther afield with effective marketing.
The only solution to this universal problem is to
form marketing alliances. Destination marketing
organizations should examine how they can
specifically cater to the needs of small and
family businesses, whether it be for a collective
website, special promotions, or piggybacking
on major advertising campaigns. On the other
hand, owners have to realize that the destina-
tion has to be competitive first, then individual
businesses can draw on increased tourist
demand.
91
Laws or regulations
Often for good reasons, laws and regulations
artificially limit the size or scope of small and
family businesses, thereby preventing many
from prospering. Why allow B&B establish-
ments, for example, but limit them to so few
rooms that they can never be more than a
sideline or hobby? Every jurisdiction desiring
growth in the small and family business sector
should conduct an audit on its own laws and
regulations to reveal problems, even if they are
only paperwork issues. Beyond that, economic
development agencies need to examine the
best ways to help this sector given the known
limitations.
Strategic Planning
Research by Rue and Ibrahim(1996) found that
families that set goals for growth planned to
grow first through equipment purchases, then
marketing efforts, followed by hiring key staff,
and finally by developing new products or
physical expansion. But if the business is never
going to grow or change in any fundamental
way, there is little need for a strategic plan.
Indeed, Ward (1987) described strategic
planning as . . . the process of developing
a business strategy for profitable growth. The
original business plan should suffice to see the
owners through enterprise start-up or purchase
and related financial and management issues.
But owners with a longer-term perspective on
growth and development need to think and plan
strategically.
Key planning issues
Carlock and Ward (2001) argued that five
pivotal variables demanded policies and plans
in the family business:
Control (management, ownership and

decision-making).
Careers (the family pursuing careers or

other roles in the business, with advance-
ment and rewards based on performance).
Capital (systems and agreements so that

family members can reinvest, harvest or
sell their investment without damaging
other family members interests).
Conflict (addressing conflicts arising from

work and personal lives intersecting).
Culture (using family values to guide plans

and actions).
These are all important elements in balanc-
ing business and family life and are discussed
again in the next chapter. In tourism and
hospitality, a number of unique considerations
enter the strategic planning process:
The business might be a secondary or

seasonal source of income, with little
growth potential.
It might be more of a hobby than a serious

way of earning a living.
Its profit-making potential might be too

limited to support paid staff or the formal
involvement and inheritance by children.
The nature of the work might very well

be unattractive to children, and parents
might prefer their children to live or work
elsewhere.
Only larger businesses, such as hotels or

restaurants, have the potential to generate
substantial cash flow and ultimately profits
upon its sale.
To Ward (1987), the really big strategic
issues were threefold: tokeepor sell the business;
to grow it or not; and to determine the extent of
family involvement, including the potential for
inheritance. Ward also argued that family issues
must be incorporated into the strategic plan, and
he recommended a formal, open process for
developing the plan.
Getting professional advice
Most experts agree that getting professional
advice is essential for family businesses. The
case studies presented in this book also high-
light the importance of advice as divergent as
banking, accounting, marketing, business and
strategic planning, estate and tax planning.
Other areas of available family business advice
concern group dynamics, health care and
related costs, and raising capital.
Many firms specialize in family business
advice, and they can be found through a simple
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92
internet search of the term family business
consultants. Astrachan (1993) suggested that
family business consultants act as facilitators to
help the family develop appropriate skills, and
such advisers should be generalists with exper-
tise in many areas. Once a trusting relationship
has been established, it might pay the family
to keep their advisers for as long as possible.
Another source is the family business institutes
that exist in universities, typically attached to
business schools. And there are a number of
family business associations that owners can join
for mutual support and learning.
Why would owners not use external
advisers? It could be a simple matter of the cost,
but in many instances it is likely to stemfromthe
founders values and attitudes. A reasonable
hypothesis is that the more autonomy-oriented
the owners, the less likely they are to ask for or
accept external advice.
Process and elements of strategic planning
for the family business
Carlock and Ward (2001) advocated a parallel
planning process for integrating and balancing
family and business concerns. The family side
of the model contains core values, family
commitment, family vision and the pro-
duction of a family enterprise continuity plan.
These interact with strategic business planning,
so that values affect the management philo-
sophy, family commitment corresponds with
strategic commitment, a shared future vision
leads to identification of a business vision, and
the result is a business strategy plan.
The family enterprise continuity plan
(Carlock and Ward, 2001: 16) addresses a series
of goals, the first group of which pertain to
securing family commitment. Does the family
vision include a desire to perpetuate the busi-
ness? How committed are all family members to
this vision, and is it based on strong core values
or philosophy? The second set of goals relates to
family participation, in which fairness and con-
flict resolution is considered. This might entail
family meetings and formal agreements. The
third group of goals deals with the special case of
preparing the next generation of leaders and
owners, and the fourth cluster of goals covers the
development of effective owners, encompassing
consideration of the family and business life
cycle and related organizational and governance
options.
The business strategy plan, according to
Carlock and Ward (2001), has three groups of
goals. The first set covers assessing strategic
potential, based on environmental scanning,
auditing, and market appraisal. Next is a set
of goals relating to exploring possible business
strategies. Basic strategic options include
renewal, reformulation or regeneration of the
family business, but using unique strengths of
family businesses should permeate the evalua-
tions. Finally, the third set of goals pertains to
finalization of strategic and reinvestment deci-
sions. An assessment of the businesss health
through a SWOT analysis (i.e. its Strengths,
Weaknesses, Opportunities and Threats) is often
a useful tool in strategic planning.
Alternatives must be considered, including
those relating to capital, markets, staff, organiza-
tion and ownership. For the family firm, usually
a long-term perspective can be taken on these
strategic issues. Then goals, both personal and
family, must be factored into the strategy, and
finally specific business strategies selected.
Mission statements
These are statements of why the business exists.
Is its purpose to perpetuate a family legacy, or
to make the family rich? Herremans and Welsh
(1999) developed a case study of an ecotourism
business mission statement that is highly
instructional. Treadsoftly, an Environmental
Education Company (see: www.
treadsoftlycanada.com) is a family business
located in the Crowsnest Pass area of Alberta,
Canada. It began in 1997, and built into its ini-
tial business plan the increasing involvement of
family members. What is unique is that the
founders wanted to establish the business with
an ideology reflecting sustainable development
and community responsibility. It is committed
to respect for the environment, co-operative
efforts within the community, use of an
environmental management system to link
strategic planning to environmental issues, and
to proactive environmental conservation efforts
93
including cumulative effects monitoring. The
mission statement reads as follows:
To delight our guests. We promote environ-
mentally and socially responsible travel that
respects our natural and cultural resources,
and educates our participants during a first
hand nature experience.
By stating core values in this unambiguous way,
the family business provides direction and
stability through its evolution.
Vision statements
The importance of the family vision (Chua
et al., 1999) has already been emphasized. This
is the vision to employ the business for the
benefit of the family, and potentially across the
generations through inheritance. Visioning can
be conducted informally by the owners and
family, or formally with the help of advisers.
According to Carlock and Ward (2001: 38), the
vision should cover five dimensions:
Desired business accomplishments (inno-

vation, growth, service).
Possible family legacies (ownership, social

responsibility).
Benefits for the family (wealth, recognition,

meaningful careers).
Responsibilities to the business (investment,

governance, philanthropy).
Responsibilities to other stakeholders (em-

ployees, customers, suppliers, communities).
Agood business vision statement provides
a clear picture of the business at some point in
the future, say 5 or 10 years forward. It is impor-
tant to base the vision on core values, or a formal
mission statement. For example, because most
family businesses in tourism and hospitality are
not profit- and growth-oriented, it is the rare
vision that will be expressed in terms of profit
maximization or continuous growth. Rather, the
vision might relate to future profitability, family
and business being in balance, and desired
value-adding. For the profit- and growth-
oriented entrepreneur, the vision might
relate more to a desired company size, target
market share, growth in sales and profitability,
professionalization through staff hiring, or
development of family skills.
Goals
General goal statements are derived from
the mission and vision. They are normally
expressed in terms of things to attain, such as
increased profitability, finding more leisure time
for the family to be together, or developing the
skills of children to eventually take over the firm.
Goals can also be expressed in terms of things
to avoid, such a high debt load, overwork, or
loss of control.
Many owners are reluctant to develop or
express their goals, according to Tagiuri and
Davis (1992), for several reasons. Some fear that
stating goals might lead to missed opportunities
or inflexibility. Goal-setting could cause conflict
over strategy, and if goals are not met, blame
might be assigned. In other cases, a multiplicity
of family- and business-relatedgoals might make
it difficult to balance or prioritize them.
Goal incongruence (or disharmony) can
occur within families, such as when children
and parents cannot agree on the future of the
business (Peiser and Wooten, 1983). This is a
life cycle problem that is likely to occur at
a particular point in the evolution of the
family business. Possible consequences include
the professionalization of the business, in order
to avoid family indecisiveness, or a loss of
strategic orientation because of stalemate.
In contrast, Poza (1988) described intrapre-
neuring as a revitalization process that occurs
just prior to or during the tenure of the next
generation (i.e. the inheritors). In these cases
the children or other inheritors, with or without
the support of the founders, adopt innovations
or make radical changes to company finances,
organizational structure or family-related
systems.
Implementation, monitoring,
evaluation and revision
What management systems must be established
or refined to achieve the goals? Owners
must anticipate the practicality and costs of
implementing their strategies, together with
the necessity of monitoring progress, conduct-
ing specific research or analyses to evaluate
outcomes, and refining the plans as necessary.
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94
Strategic Options
Strategies are the courses of action necessary to
achieve major goals. There are no optimal or
correct strategies to follow, only choices. We
start this section with some generic business
strategies that could apply, in theory, to any
venture. We then examine family-specific strat-
egies and related issues.
Generic business strategies
Miles and Snow (1978) developed a typology of
business strategies that has also been used in
the study of family businesses (e.g. Daily and
Dollinger, 1992; McCann et al., 2001). The
Defender strategy is sticking to what the firm
knows best. An Innovator/prospector strategy
embodies taking risks in order to provide new
products or services, and applies to the growth-
oriented entrepreneur. Following closely on the
heels of innovators, the Analyser strategy seeks
competitive advantage by adopting proven
strategies. The Reactor strategy is one of
adapting only when change makes it necessary.
However, these classic strategies look more
like attitudes than concrete courses of action a
business might take. Lifestyle and autonomy-
oriented owners are generally conservative and
therefore can be expected to be Defenders
rather than Innovators. The tourismand hospi-
tality industry in general displays a great deal of
the Analyser strategy in that successful products
and services get widely copied, often to the point
of standardization. What is poignant about the
Reactor strategy is the likelihood that many
tourismand hospitality business cannot adapt in
a timely or adequate manner and therefore are
constantly at risk.
Building strategy upon the unique
advantages of family business
Donnelley (1964) suggested that family busi-
nesses contain several inherent strengths and
weaknesses:
Strengths:
available family resources;
family sacrifice;
networks within family and the

community;
loyalty and dedication to family, staff and

business;
unified management under the owners;
social responsibility;
continuity and tradition, including family

myths and legends;
integrity;
special knowledge;
ability to capture niche markets; and
long-term orientation.
Weaknesses:
conflicts between family interests and

business interests (e.g. taking money
from the business versus reinvesting in its
development or growth);
lack of discipline over profits and perfor-

mance (e.g. lack of firm cost controls);
failure to adapt or react quickly to chal-

lenges or opportunities (similar to inherent
conservatism: Ward, 1998); and
nepotism versus performance (employing

or advancing family members without
regard to ability).
To Donnelley, most successful family
businesses place institutional restraints on
family prerogatives and these are backed by
rigid tradition.
Carlock and Ward (2001: 192) suggested
that additional competitive advantages can be
gained in family businesses. Long-term payoffs
can be pursued, even to the point of experiment-
ing with options. But while this is possible for
successful family businesses seeking perma-
nence, it is not for those struggling to survive.
Furthermore, some family members might
be inclined to oppose anything that limits
their immediate gratification. In tourism and
hospitality, families can sometimes afford to sit
on their real-property assets waiting for eventual
payback even while cash-flow and profits are
weak.
Flexible organization is another potential
advantage. Assuming a shared vision and
unified control, the family business can avoid
bureaucratic infighting, react quickly to seize
opportunities, change direction fast, and be
innovative. One of the secrets of successful
entrepreneurs is to move before their
95
competitors, even when the decision involves a
degree of risk. This principle seems to apply
when individuals with insider knowledge and
specialist skill are the first to offer touring or guid-
ing services, are quick to exploit a new target
market segment, or terminate a product when it
fails to meet expectations.
A strong commitment to quality, based on
family pride and social responsibility, can result
in loyal customers and strong family-branding,
as in the OReilly case. Who is better to deal
with unhappy or demanding customers than
an owner-operator? Who, other than family
business owners, is a tangible part of the prod-
uct? As a strategy, creating a family brand will
require patience, commitment to quality and
clever marketing. It does not hurt to have strong
personalities and colourful characters in the
business.
Niche market positioning is a mainstay of
small, family businesses. In tourismand hospital-
ity the limitations of being restricted to local and
regional markets make it essential to develop
strong relationships with one or more niches.
These might be affinity groups and local com-
panies, other family businesses, or well-known
repeat visitors. To find real advantage in these
small markets, the family business has to have
cost, product quality or service advantages over
larger competitors.
Investment in people is also a hallmark of
the family business, both for family members
and staff. Having trustworthy employees is a
plus, especially when they can be relied upon to
adhere to the family values and vision. When
employees become part of the family addi-
tional benefits accrue. In a tactical sense, this
might permit the family business to save on
recruitment and training, and in terms of strategy
it might permit investment in developments that
require a very high service component, such as
catering or five-star accommodation.
Strategic options: renew, reformulate
or regenerate
Given an existing course of direction or
strategy, any strategic thinking will first face the
question of whether to continue or depart from
the current direction.
Renewal
Capitalizing on existing strategy is the renewal
option (Carlock and Ward, 2001: 180). It does
not imply a total absence of change, but focuses
the owners attention on getting more out
of current capabilities and markets. It can
be thought of as value-adding if the current
strategy is to avoid debt and growth.
Reformulation
Improving the strategy is the essence of
reformulation. Owners can examine how to
strengthen their capabilities and develop new
markets. Are there assets to be harnessed?
Regeneration
The position of many family companies in
tourism and hospitality, upon reflection, is likely
to be weak. A new owner, having purchased a
business, or an inheritor, might be confronted
with these weaknesses all of a sudden and have
little choice but to come up with a new strategy
or a radical reformulation of the old one. New
investment might be required.
Given the research evidence and the case
studies in this book, many owners in the tourism
and hospitality industry will be looking to sustain
their business, that is to keep it profitable but not
to grow it. Others will want to add value in order
toincrease profitability, andonly a fewwill desire
substantial growth or diversification. Other fun-
damental choices are to sell the business, take in
external investment, or to hand over control to
professionals.
These options are now looked at in greater
detail.
Sustainability option
Owners of family businesses can, and usually
do, elect to remain small and controllable.
Because that option is predominant, and
probably always will be, it cannot be dismissed
as being unimportant to the industry or to desti-
nations. Effort must be directed at understand-
ing this choice and helping the owner-operator
ensure that the business remains viable enough
to support the family. This will be termed the
78 Chapter 4
96
sustainability option. Beyond this basic model,
options include value-adding, growth measured
in terms of diversification or physical expansion,
and the plan-to-sell option. Planning for inheri-
tance (the succession option) is considered in
detail in Chapter 5.
An old adage applies to owners who elect to
keep their family business unchanging: if you do
not grow, you will inevitably fall behind. The
essential problem with staying the same is that
nothing else remains constant! How can a small
business compete in such an evolving environ-
ment one in which innovation brings on new
choices for consumers all the time and the num-
ber of competitors increases? And if the business
fails to improve at all, will it not simply decline?
This can easily result in a downward spiral
which, as stressed by Shaw and Williams (1997)
can seriously harm the entire tourist destination
and render it uncompetitive.
To remain viable (i.e. competitive and prof-
itable for the owners) in the absence of growth
requires several strategic responses. The first is
reinvestment to ensure that the physical plant
remains modern and attractive. An inherent
difficulty is with owners who purchase old
properties because they are affordable or in
the right location, without considering the
investment that will be required to maintain
and upgrade the property. Another problem is
with cash-flow, in that owners of small family
businesses might have to take out too much of
the profit for their own subsistence.
Attentiontochanging market characteristics
and consumer preferences is important. It
is always a mistake to assume that what is
now desired or even popular will remain so.
Several authors have documented how funda-
mental changes in tourism have resulted in a
revolution frommass markets to custommarkets
(Poon, 1993), and how this change has led to
many business failures (Peters and Weirmair,
2001).
A small, static business in the tourism and
hospitality industry can potentially retain its
competitive advantage indefinitely if it meets
one or more of the following conditions:
Uniqueness (there are few options to this

product or service; it is one-of-a-kind).
Ideal location (the business has the best

location).
Superb service quality (customers rave

about the service, the food, the hosts).
Cost advantage (competitors cannot keep

their costs as low).
Price advantage (better expressed as

perceived value for price i.e. customers
think they are getting more than they pay
for, relative to competitors).
What should be clear, however, is that few
family businesses actually possess or can retain
these enduring competitive advantages without
changing. Often the owners merely think they
have advantages, but they are not informed
about what is happening around them. If they
do learn about competitive threats, they are
often unwilling or unable to adapt.
Value-adding option
Improvements in management systems and
marketing can achieve higher profitability
without necessarily requiring physical growth.
In several of our case studies the owners
explicitly realized the need for value adding,
and devised ways to achieve it within their goals
framework and operational constraints; some-
times this led to modest growth. The following
are generic value-adding options.
Using technology
Much attention has been given to the use of
computers in enabling sophisticated manage-
ment systems for small businesses, and of the
internet in improving small-business marketing.
Employing readily-available accounting soft-
ware should result in better cost control, quicker
billing of customers, and improved cash flow.
Internet marketing, particularly when imple-
mented in partnership with destinations or
business allies, should result in an extended
customer base.
Efficiency gains
The learning curve, or how owners apply what
they learn over time, should result in reduced
costs and higher outputs. Applying yield man-
agement formally (with the help of sophisti-
cated software) or informally, based on specific
97
knowledge of the business and markets, should
generate higher profits.
Adding new services and products
This is likely to be the most viable value-adding
strategy for family businesses in tourism and
hospitality. Owners can follow the leaders by
watching what products and services appeal to
their target markets, or they can try out their
own new ideas.
Moving up-market
Improvements to the physical plant, adding
new products and services, and constantly
improving service quality can enable the owner
to charge higher prices and attract higher-yield
customers. For example, taking a modest B&B
establishment, the reduction of rooms in favour
of room upgrading (e.g. adding en-suite
bathrooms and antique dcor) could enable
the owner to charge more.
Diversification option
One of the characteristics of small, family
businesses is that most of their trade is local or
regional in nature. This applies in tourism, as it
is difficult to compete with chains and major
players in attracting tourists from afar, and in
hospitality firms that must rely on residents
for steady business. This makes diversification
difficult.
The Bornholm (Denmark) research,
reported later in this chapter, revealed that
a small proportion of owners were engaging
in diversification strategies. Some fall into this
naturally, while for others it might only come
about through careful research or trial and error.
There are several patterns to diversification, and
what differentiates these from value adding is
the related growth of the business.
New markets
On Bornholm, several owners were able to
commence export of their products off the
island to other parts of Denmark or globally.
Others decided to pursue both the resident
and the tourist markets, mainly because of the
extreme seasonality of demand concentrated in
two summer months.
New products and services
A common response to seasonality of demand
is to use business infrastructure for different
purposes, such as hosting private functions and
producing special events. This can be simple
value adding, but might very well require
growth in staff, investment in specialized
equipment, and modification of infrastructure.
New ventures
Tourism provides the opportunity for entrepre-
neurs to own or even manage more than one
business simultaneously, such as a hotelier who
adds a restaurant or tour service. This vertical
integration generates value by bringing more
sources of revenue from tourists into the same
company. Knowledge of the tourism value
chain is essential for this strategy to work, so
owners familiar with different aspects of tourism
will have the advantage. Rarely, an owner buys
or develops counter-cyclical businesses that is,
operating in different parts of the world with
opposite or complementary seasons. An exam-
ple would be for a family in Bornholm to run
their business for several months, then move to
a warmer climate to operate a different business
the rest of the year.
Webster (in Thomas, 1998a) cautionedthat
diversificationcan present problems for the small
business operator. It might be better to stick to
the core business if diversificationstretches ones
financial resources, time and skills. Poza (1988)
went further, arguing that Most diversification
outside the products, manufacturing processes,
and markets that firms know well fails.
Physical expansion option
Adding to the size of the establishment might
have the effect of increasing the need for paid
staff or professional managers. The owner-
operator and family must carefully consider
how much they can manage in terms of
physical space (e.g. number of rooms to
clean in a motel), time commitment (hours per
day and week), resources available (equipment,
80 Chapter 4
98
computers, vehicles) and variable costs. This
issue of fixed versus variable costs is crucial in
terms of yield management.
Taking external investment in the business
How much investment can be handled without
losing family control is an important issue. The
additional capital might make the difference
between remaining too small and growing to
the optimum level, or in having an adequate
reserve to weather low cash-flow periods.
Plan-to-sell option
Many, perhaps even most, owners in tourism
and hospitality, plan to sell their business and
hope to get the sweat equity out of their
efforts. In other words, the business might not
be profitable in strict accounting terms, but it
supports the owner or family until such time as
a major capital gain can be generated through
sell-off. This might even be the only retirement
plan available to owners, but it is assuming a lot
about the future value of land or other assets
and is therefore risky.
Professionalization option
If the family business gets too big, complex
or demanding, or if the owners want to try
something else, they might opt to hand over
operations and even control to professional
managers. Owners might also consider the
absence of potential heirs to be an adequate
reason for bringing in paid professionals.
According to Goffee and Scase (1985),
a quasi-organic management structure often
occurs where owners retain the right to intervene
at any time, but management is nominally in
the hands of professionals. As a transition stage,
this structure entails some risk of inefficient inter-
ference by owners and owner-manager conflict,
so a board of directors might be necessary to
make it function smoothly. The family business
literature is not firm on just how much conflict
arises in such transition periods (Sharma et al.,
1996).
As family firms growand become more pro-
fessional in their management, does innovation
and entrepreneurship decrease? Mintzberg and
Waters (1990) suggested that planning and
procedures might replace vision and entre-
preneurial activity, but there is an absence of
evidence on this matter that applies to tourism
and hospitality, probably because so few family
businesses in this industry get big or make the
transition.
Strategic Marketing and Family Branding
Marketing is inherently challenging for small
businesses (Friel, 1999), and typically the
owner takes a short-term (less than 1 year)
perspective. Other weaknesses include:
narrow scope and range of marketing

activities;
simplistic and haphazard efforts;
reactionary, not innovative;
informal; and
opportunistic rather than systematic.

All marketing efforts should be based on
market intelligence, yet the UK national survey
of small tourism and hospitality businesses
(Thomas et al., 1997) found that only 50%
did market research. Of those that completed
some research, the focus was on customer needs
and service, while the business environment was
least researched.
These weaknesses stem from a combina-
tion of limited resources, lack of training and
skills, and the inherent difficulty of small busi-
nesses in having any kind of impact on the mar-
ketplace. Consequently, a number of strategies
suited to small businesses should be contem-
plated, namely niche marketing, relationship
and cooperative marketing, plus the family
branding option. Marketing strategies also must
be considered in light of the broader options
discussed under strategic planning.
Niche marketing
Many owners rely on the popularity of the desti-
nation to bring in customers year after year, and
fail to consider what their own specific appeal
99
might be. They offer completely undifferen-
tiated products (typically accommodation
and dining), but without differentiation, every
business is completely substitutable. Morrison
(1998: 194), commenting specifically on hotels
in peripheral areas, argued that . . . product
differentiation and extension, market diversifi-
cation and flexible specialization are necessary
strategies.
The aim of niche marketing is to focus on
one or several market segments that desire, and
will pay, a premium for the kind of customized
product, personal service and unique experi-
ences that a family business can provide.
Differentiation for niche markets can be based
on several advantages. The first is geography,
including the always-wise strategy of building
strong community ties. Or the owner might have
personal knowledge about, or contacts in, a
more distant marketplace that canbe exploited.
Providing a unique service or experience is
advantageous. Historic accommodation estab-
lishments with antique dcor stand out from the
ordinary. Tour operators with detailed knowl-
edge and access to special places are likely to be
more appealing than large tour companies.
Families that are part of the product offer some-
thing extra. The secret is to think about the total
visitor experience and the specific benefits
customers derive.
Relationship marketing
Being customer-focused should result in the
establishment of excellent relationships with
loyal customers. While it is desirable always to
have new customers (who then spread positive
word-of-mouth recommendations to others),
repeat business is of tremendous value.
The underpinning philosophy of relationship
marketing for the family business is that
the owner and guest connect on a personal
level, and the business and guest engage in a
permanent dialogue.
When an inquiry is made, a potential
customer approached, or a real person buys
the service on offer, the opportunity exists for
relationship building. In wineries, for example,
every person who shows up to taste the product
is a potential long-term customer. All too often,
however, wineries let people come and go
without even attempting to engage them in
conversation, learn their preferences, get their
name, or add them to a mailing list.
Relationships require effort, and the
customer will only make that effort if rewarded
by quality service, great experiences and specific
bonuses. A computer database and mailing list
are the basic elements, but the customer does
not want to be bothered with a lot of useless
contacts. Specific requests for feedback from
customers are important.
Pricing and packaging
Competing on price is a potential trap. As
a strategy, it is usually better to find ways to
cut costs (leaving a higher profit margin) and
improve perceived value than to cut prices.
Dependence on a single tour operator can bring
in volume, for example, but they might require
an accommodation operator to cut prices to
the bone in order to maximize tour-company
revenues.
Hankinson (1989: 82) observed from
research that Most of the hotels followed a
policy of rigid target-return pricing which exem-
plifies a behaviour patternclosely approximating
survival. Similarly, simplistic cost-plus and
follow-the-leader pricing are tempting for
unsophisticated owners and managers, but
pricing should follow from a broader strategy
and incorporate both packaging and yield
management.
Packaging is a way of expanding the market
appeal of many small businesses. Customers can
be sold a standard package at a given price, or
they can be given the option of assembling their
own froma menu. The allure of packaging to the
customer is a combination of perceived value
(they think it costs less than all the elements
would cost individually, but this is not always the
case), convenience (someone else has done the
hard work for them) and uniqueness (getting a
complete experience that is otherwise difficult or
impossible to arrange on their own).
The basic approach to packaging is for an
operator to pull together elements of the travel
or leisure experience, focused on the specific
business. For example, an accommodation
82 Chapter 4
100
operator makes a stay at their establishment the
centrepiece for a package, encompassing room,
recreation and meals. The recreation compo-
nent can be sub-contracted or a simple matter
of booking a tee time for the customer and
including the price of golf in the package.
More complex packages require business-
to-business relationships or the intermediary
power of a marketing alliance. The idea is tooffer
potential visitors a destination package allowing
a choice from many accommodations, attrac-
tions and services offered by small and
family businesses in the area. This approach
might have to be developed in conjunction
with a business accreditation system to ensure
quality, and a booking system that allows
customization.
Yield management
Even the smallest of businesses can benefit from
the practice of yield management. A number of
special considerations apply to small and family
businesses. Yield management begins with
realization that unused capacity represents a
major loss of potential revenue for the business.
For example, accommodation units that are
unused and empty seats on a bus can never be
replaced they are perishable commodities.
Other businesses with high fixed costs, including
restaurants that are fully staffed but sometimes
devoid of customers, can also benefit from yield
management. With this in mind, owners and
managers often seek ways to reduce opera-
tional costs, such as by cutting back on the
hours of operation or keeping staff levels to a
minimum. Cyclical closure of the business is
often practiced, but in most cases these strate-
gies are a form of capitulation and it would be
preferable, financially, to attract more paying
customers.
The simplest form of yield management
occurs through price reductions in off-peak
demand periods, such as winter-season specials
at resorts and mid-week lunch discounts in res-
taurants. Combined with attractive packaging,
new business can be generated within market
segments that are sensitive to price and respon-
sive to specials.
Raising prices when it is anticipated
that demand will be high is less appealing to
many owners, but generates substantial profit
enhancements to the businesses that employ
it. Based on historical demand patterns, which
are often highly predictable, the business takes
advantage of the fact that many customers
(particularly travellers) cannot or will not change
their plans. It works best for hotels and transport
companies that can continuously revise their
schedule of fares for specific dates. Others
will have to make do with seasonal or
weekdayweekend price changes.
Yield management has to be integrated
with policies on reservations, advance payments
and refunds, over-booking and length of stay.
For example, many accommodation providers
want two-night minimum stays for weekends.
Companies practising yield management also
have to be concerned about customer reactions,
as variable pricing inevitably produces situations
where customers have paid different prices
for the same experience. The principle benefit
they received for higher prices is a guaranteed
reservation exactly when they wanted it.
The very basic decisions that have to be
made about growth or value adding are linked to
yield management. What is the sense of building
new accommodation units, for example, if it is
easier and cheaper to fill up available capacity
through more aggressive marketing including
discounts, packagedprices and other incentives?
Owners have to examine their operations to
see if the forecast benefits of expansion are
worthwhile and necessary in order to add value
and profit to the enterprise.
Accounting for family labour enters the
yield management picture as well. All too often
family labour is devalued (relative to wage and
benefit levels for employees), or not accounted
for at all. This makes it difficult to determine the
true costs of various operations, and therefore
makes it hard to implement yield management.
For example, additional accommodation units
would potentially generate more revenue,
but are all labour costs being calculated? Is it
assumed that family members will simply work
harder? The same applies to determining the
potential benefits of price reductions to fill
surplus capacity each additional room filled
will also have a marginal labour cost.
101
Co-operative marketing
Clarke (1995) observed that farm accommoda-
tion operators tend to be isolated, engage in
rivalry and exchange little information, but this
might be typical of small and family businesses
in tourism and hospitality. To overcome many
inherent limitations of being small and isolated,
the business owner has to engage in co-
operative marketing and consider other forms
of strategic alliance.
Co-operative marketing can take several
forms, fromsimple tocomplex. Informally, many
business operators agree to a mutual referral
system in which potential customers are given
specific referrals to other businesses. This works
well during peak-demand periods, or when
customers want advice on what else to see or
do in an area.
More formal arrangements are usually
organized by tourist boards, chambers of com-
merce and the like. Normally it is the destination
that is promoted through these mechanisms,
with individual members being a secondary
consideration. Such member-based alliances
allow the pooling of resources for additional
marketing reach, plus the sharing of market
intelligence or formal training.
Evans and Ilbery (1992) described pro-
ducer cooperatives among farm-based accom-
modations that have arisen on order to produce
or purchase more cost-effective advertising.
These are also called product clubs or market-
ing consortia, where the same types of business
jointly promote their services (e.g. a marketing
consortium of ecotour operators).
Advantages of a co-operative marketing
effort were listed by Morrison (1998: 194):
networking;
achieving greater economic scale;
obtaining professional advice;
access to better technology;
support for training and education; and
pooling of resources.
For the larger business, buying into a fran-
chise gets both a name brand and its marketing
strength, while joining an exclusive association
(e.g. luxury inns or historic country restaurants)
provides marketing power and a form of
branding.
Family branding
The most prominent family-dependent issue in
marketing is that of exploiting the family-firm
status, or the family name, for competitive
advantage. The term family branding can be
used to describe a family of brands, such that
the same brand name is used on every product
the company makes or on every service it
offers. If the overall brand name has value in
terms of acceptance by customers, then all the
products and services using that name should
be well received. On the other hand, if a brand
associated with quality is later applied to a
low-price product, the consumer might begin
to think that the entire family of brands has
lowered its standards.
Dunn (1995: 21), based on analysis of
successful Scottish family businesses, concluded
that some of them used their family status for
marketing purposes to imply quality, care, and
special attention to customers. Because the
brand is often the family name, it should ideally
communicate all the following brand attributes:
Quality and value (service; good value

for money; reliability) based on past
performance and the assumption that a
family takes pride in all it does.
Tradition (we have a long history; we are

rooted in the community and we care
about you).
Personality (we are a family, different

from corporations, with our own way
of doing things; we offer all our clients
customized experiences and a personal
touch; we are always ethical in our
business dealings).
In some cases the attributes can also

signify culture or tradition, as in an ethnic
business. Whatever the name, customers
should be made to feel they personally
know and understand the family behind it.
There are potential negatives associated
with exploiting ones name and family-business,
status, including the fact that some people
associate family business with a lack of
professionalism and nepotism. As well, there
might be a fear of attracting unwanted
attention to the family and thereby of including
some risks.
84 Chapter 4
102
Networking
Families should have advantages in dealing
with other families, especially when based
on blood and marriage relationships, but
also when there are solid roots in a community.
Networking works at two levels, both social
and business-to-business. It can be formal,
as through membership in marketing organiza-
tions, or informal. Network theory has been
applied to the study of both social and business
connections. Dodd (1997) examined formal
social networks in the UK and concluded that
business success might be linked to membership
in social organizations. Business owners tended
to be more active this way than employees
or the self-employed. Littlejohn et al. (1996)
found that small business owners placed more
value on social or informal networks than on
structured consortia.
Birley and Cromie (1988) suggested that
the early stage of enterprise development is
characterized by heavy reliance on an informal
network of friends, family and local social
contacts, with increasing reliance over time
on professional links. Ram (1994) determined
that ethnic or minority networking provides
both strengths and weaknesses to the business,
with a real risk being the exclusion of external
assistance and contacts.
The Seasonality Challenge and Strategic
Responses in Bornholm
Because cyclical demand fluctuations are such a
global concern for the tourism and hospitality
industry, how businesses and families react
is of utmost importance. In this section the
seasonality problem is explored in detail, and
results presented from research in Denmark to
illustrate strategies being employed by family
businesses.
Seasonality and its causes
Seasonality in tourism demand is a universally
recognized phenomenon (BarOn, 1975; Baum
and Hagan, 1997; Baum and Lundtorp, 2001).
It results in fluctuations in tourism volumes over
the calendar year, and must be differentiated
fromlonger-termbusiness cycles and short-term
changes related to weekly and daily travel pat-
terns. Seasonality of demand is typically caused
by institutional and/or natural factors, with the
pattern usually remaining stable over many
years. This predictability of seasonality makes it
possible for businesses, lenders and investors to
anticipate many of its impacts.
Baum and Hagan (1997: 2) listed the main
causal factors:
climate or weather;
social customs, especially holidays;
business customs, such as meetings and

events;
calendar effects, including important dates;
supply side constraints such as labour

availability; and
alternative uses of facilities.

Butler (1994) added inertia to the list of
causes, and later (2001) separated demand
factors fromsupply attributes. Aset of modify-
ing factors such as pricing can be employed
by destinations and businesses. All these inter-
actions necessitate differentiating between
demand (customer) and supply (business) fluc-
tuations when discussing seasonality in a given
area.
BarOn (1975) examined arrivals data from
16 countries over a 17-year time frame and
concluded that some areas have a . . . very
strong high season with negligible tourist activity
during the rest of the year (p. 2). Extreme
months (p. 16) were said to be those deviating
from random irregularities by more than 1.5
standard deviations. Jeffrey and Barden (2001:
123) in their analysis of seasonality in hotel occu-
pancy rates in England observed that Seaside
and remote or peripheral hotels generally have
. . . pronounced or extreme seasonality.
Extreme seasonality remains a somewhat
subjective and elusive concept. While it can
be approached as a statistical problem, using
various measures such as those of demand
amplitude or inequality (see, for example:
BarOn, 1975; Wanhill, 1980; Yacoumis, 1980;
Lundtorp, 2001), the numbers do not necessar-
ily shed light on the implications for various
businesses or the destination.
103
The challenges of seasonality
Seasonality of demand is often referred to as
a problem (Allcock, 1989), and destinations
generally work hard to reduce it. For individual
businesses the negative impacts or costs can
include:
peak-period crowding and high work

loads;
cash-flow problems;
unused capacity and lower profitability

during low demand periods;
difficulty in attracting and keeping skilled

employees;
need for seasonal workers and part-time

staff;
difficulty in attracting investors and

lenders.
An overview of seasonality in Europe
(McEeniff, 1992) discussed patterns (e.g.
domestic tourism is much more peaked than
international arrivals), trends (greater spread of
demand was occurring over time) and potential
solutions (such as all-weather resort facilities).
Coopers and Lybrand Consulting (1996: 1),
in a report for the Canadian Tourism
Commission, described seasonal variations in
tourism demand as . . . one of the biggest
challenges currently faced by the Canadian
travel industry.
A major analysis of seasonality in occu-
pancy rates among English hotels was reported
by Jeffrey and Barden (2001). Some hotels
did better than others, depending principally
on their target markets. Those oriented toward
business travellers and conventions, or group
tours, displayed significantly less seasonality.
Practising yield management definitely helped,
but deep price discounts did not. They con-
cluded (p. 123) that . . . most hoteliers could
extend their seasons through better marketing,
but some would find seasonal closures to be
the most cost-effective solution to pronounced
seasonality.
Unfortunately, many attempts to reduce
seasonality fail. Butler (1994) observed that
growth in demand often occurs in the peak
season, dwarfing attempts to improve seasonal
balance. In the northwest of Scotland he found
that the pattern of seasonality had not changed
appreciably since 1970, although shoulder-
season volume had increased. In Ireland,
Kennedy and Deegan (2001: 51) observed that
Many businesses in Irish tourism experience
long periods of low usage and short periods of
high usage, although there were some signs of
improvement.
The common lack of success in defeating
seasonality suggests that destinations should
look more carefully at other strategies. The most
profound change in common practice would
come froma focus on yield, rather than volume.
For example, Kennedy and Deegan (2001: 68)
suggested that Ireland should preferentially
attract markets with a high propensity to travel
out of the peak season, spend the most money
per capita, stay the longest andtravel throughout
the country.
Another possibility is to carefully examine
supply with a view to eliminating old, surplus
capacity (Lundtorp et al., 1999), thereby
improving occupancy rates for all remaining
businesses. Flognfeldt (2001: 110) suggested
that some destinations must learn how to live
with strong seasonality, and his basic idea is to
fit different types of tourism production into the
seasonal patterns of other production activities,
including an adjustment of some public
services. He also noted a number of business
strategies in place in rural Norway, including
mixed employment (e.g. tourismand agriculture
or tourism and teaching), use of student and
migrant workers, developing new products to
expand the season, taking long holidays, getting
into export markets, and moving away to work
or study in the off-season.
Seasonality and the family business
For family businesses seasonality can mean
severe personal and financial stress, an impedi-
ment to having children take over the business,
and a disrupted leisure and social life. Families
face a heightened risk fromextreme seasonality,
in light of the following considerations:
The family house and property are often

an integral part of the business (e.g. small
hotels, farmstays, B&B or guest houses,
campgrounds on family land).
86 Chapter 4
104
Families often depend completely on a

single business venture for their income.
Family businesses tend to minimize labour

costs by maximizing their own inputs,
resulting in long hours of hard work.
Many parents want to leave a tangible

legacy for their children in the form of a
viable business or other real property.
Cooper et al. (1993) said that in order to
justify remaining open, a business must at least
cover the variable costs associated with staying
open. These could be heating, labour and
insurance. In the case of family businesses, this
rule does not fully apply. Families that provide
all the necessary labour can avoid payroll costs
altogether. When they live in the accommoda-
tion, as many do, at least some of the costs
of staying open can be considered as family
subsistence costs. Families can employ strategies
used by other companies, but there are also
some unique options available to them. These
will be explored through assessment of the
Bornholm example.
Seasonality in Bornholm
Bornholm (population 45,000), like many
resorts, and particularly islands, experiences
greater seasonality than other types of destina-
tion (Butler 1994). Peripheral regions at higher
latitudes also find it more difficult to influence
seasonality in demand (Lundtorp et al., 1999).
Furthermore, islands frequently rely on natural
attractions, particularly the beach and water
sports, which in temperate and high-latitude
climates experience huge temperature swings.
Bornholm is one of the most renowned
destinations in Denmark, popular since the late
19th century. It has been described as . . .
a mature seaside resort with an established
tourisminfrastructure dominated by small enter-
prises (Gyimothy, 2000: 56). Sixty-four per cent
of all visitors come for holiday reasons, and this
figure rises to 90% in the summer. The key
markets are regional, namely Danes, Swedes
and Germans.
A hotel survey on Bornholm by Sundgaard
et al. (1998) foundthat 43%of hotels were small,
family owned, and opened in the peak-season
only (the actual percentage is higher, owing to
non-response). Twenty-three per cent of larger
hotels were seasonal andownedby limitedliabil-
ity companies. Almost all the campsites and
youth hostels were closed off-season, plus 88%
of holiday centres, 65% of large hotels, 84% of
medium hotels, and 65% of small hotels. Some
restaurants and other catering businesses were
also seasonal. Most owners were residents, and
most businesses were small in size.
Bornholm is similar to two other Baltic
islands, land and Gotland, in both its history
and current seasonality. All three islands possess
high levels of local ownership and control. Twin-
ing-Ward and Baum (1998) concluded that all
three had entered a period of decline and were
suffering from the ill-effects of seasonally low
demand. The problems are augmented by a
dominance of small, family enterprises . . .
which in many cases lack the professional
training required to secure a high quality of
service (p. 135).
Lundtorp (2001) summarized the extreme
seasonality problemon Bornholmby noting that
for 9, slow months of the year the island attracts
only 33% of total demand, and over 10 months
the figure is only 50%. Bornholm and other
parts of Denmark, he suggested, display high
seasonal amplitude (p. 31). Lundtorp (2001)
also concluded from his analysis of tourist
trends that there had been no substantial pattern
change in seasonality for Denmark or Bornholm
in the 19891998 period. Lundtorp et al. (1999)
concluded from their analysis that seasonality
could not realistically be eliminated, and not
even substantially reduced. A major reason was
the uniformity of visitors and their behaviour
Bornholms shoulder seasons attracted the same
types of loyal visitor as the peak season, for the
same reasons and length of stay. Most recently,
increases in volume have occurred, but this has
not altered the extremeness of seasonality. It
remains to be seen if a volume increase in itself
can alter the seasonal responses of local
businesses.
The seasonality problem
Over half (46 or 57.5%) of respondents in
Bornholm indicated their business closed for
part of the year. For seasonal operations, the
105
most typical width of the open season was
7 months (14 indicated AprilOctober), with
6 months (MayOctober: seven respondents) or
5 months (MaySeptember: ten respondents)
also being common. The typical seasonal
business on Bornholm therefore experienced
a 2-month peak tourist season, from 3 to 6
shoulder months and 4 to 7 closed months.
Respondents were asked if their business
was highly seasonal (as one item in a set of
statements about the business), and 68.3%
selected fully agree on a scale of five
(mean = 4.23) while only 10% checked fully
disagree. In a separate question, respondents
were asked if highly seasonal demand was a
problem for the business, and only 18.3%
checked a serious problem while 53%
indicated it was somewhat of a problem and
34%said it was not a problem. Fromthese two
responses it can be concluded that for many
owners extreme seasonality was not a serious
problem because they closed and did not worry
about it. In other words, they were coping.
A selection of quotations from the inter-
views helps to understand the nature of the
seasonality problem for family business owners,
and especially its impact on profitability. Of
course, some of these problems also relate
to small size and competition:
We have to be very careful about our business,
as the profit of our activities is low. It puts a
limit for what we would like to do. We have
to take small steps forward.
(Campground; sole proprietor; closed part year;
married but children work elsewhere)
We keep an eye with our expenses, as it is not
possible to increase our prices because of the
competition . . .
(Campground; sole proprietor; no children;
open April to November)
It is not possible to extend the opening season
because of the climate but we could use more
of our capacity in shoulder seasons.
(Married couple; hostel and tour operators)
The problems on Bornholm are the same as
in the rest of the country. Eighty per cent of
the business should be closed. The earnings
are too low, and the amount of risk-willing
capital also too low. The companies are so
weak that it is impossible to develop new
products.
(Hotel/restaurant owner and former banker)
Responses to seasonality
Respondents staying open all year were asked
how they dealt with the low season economi-
cally. Four choices were provided, and respon-
dents could select more than one, plus a space
was provided to write in other actions. The
main response was dismissal of staff (25
responses), followed by 22 who supplemented
their income from other sources. Fourteen drew
on savings and six took out loans to survive the
low season. Other actions mentioned: arrange
parties (three respondents); and (one response
each) take a vacation; have personal guests;
rely on social security, use private financing,
and work alone. It is clear that being open all
year is not the same as being active or profitable
all year.
The remainder answered the question of
what they did when their business closed part
of the year, with five categories provided and
space allowed to write in other actions. There
were 76 responses fromthe 57.5%of the sample
who closed part of the year. The main activity
was maintaining or improving the property
(21 mentions). Eighteen respondents owned
another business and nine took another paying
job. Only 16 said they enjoyed the leisure time.
No-one selected unemployed. Other activities
were: produce stock (five mentions); take
courses (one mention).
Coping strategies
Selected quotations from the interviews
illustrate a variety of coping strategies, being
defined herein as closure of the business plus
the absence of attempts to expand. These
owners accept extreme seasonality and try to
cope with its impacts:
We close when season is over and use the rest
of the year to keep up the facilities of the site.
(Campground)
Our open season is from 1 May to 1 October.
The rest of the year I plan for the next season,
renovate, do some marketing and make
bookings and reservations. I also have another
occupation out of season.
(Sole proprietor; hotel and restaurant;
no children)
88 Chapter 4
106
Opening season is 1 April to 1 November. The
rest of the year we keep up the facilities take
some vacation as we have long working hours
during the summer.
(Married couple; hostel and tour operators).
We rent our flats in high season for about 13
weeks. Outside tourist season we paint and
repair the flats and make them ready for the
next season. Then we also use our time for our
primary income: the farm.
(Married couple; three flats on farm)
Coping is not just for micro businesses, as
witnessed by the example of two brothers who
own and operate an inherited hotel with restau-
rant. The wife of one of the brothers also works
full-time in the business. The hotel and restau-
rant are closed for the winter but they do open
for conferences or functions, on demand. In the
slowseason the family runs the business without
regular paid staff and occupy themselves with
maintenance, planning the next season and tak-
ing bookings. High-seasonrequires employment
of three more staff plus six or seven students
during their holidays. Their strategy seems to be
mostly coping, with a little combating.
Combating
Many business owners try to defeat seasonality,
or at least expand the shoulder seasons for
enhanced profitability, although they might still
be forced to close for part of the year. The main
criteria for inclusion in the combating category
are attitude and action, as the following quota-
tions reveal:
We continue to develop our concept . . .
We would like to have more guests in the
shoulder seasons. In the high season we
have a full house.
(Sole proprietor; campground; closed part year)
I would like to be able to make more invest-
ments and enlarge my business. It is my
intention to establish ten more beds in the
next year and also a hall for conferences.
(Married couple; farm-based accommodation;
closed part year)
Our concept is very popular among locals as
well as tourists. In winter we have many
arrangements for the locals, and in high season
many of the locals recommend us to tourists
asking for a place to eat . . . Our business is
running well, and we have a lot to do in high
season, where the capacity is fully used. We
could use more guests in the shoulder season,
which we would like to be extended by 12
months.
(Restaurant owner; open all year; one
daughter works in the business)
Our firm is very solid with a fine yearly net
profit . . . This (fish smokehouse) is very
popular with tourists and our sale for tourists
is substantial but not as big as our export. We
also export a lot to private people in Denmark.
Who order by phone or e-mail . . . We find
ourselves in a good position on the market and
expect a good profit in the future. Our business
gives us a satisfactory income, and we do not
intend to enlarge our volume.
(Married couple; children live off-island;
open all year)
The export (i.e. products) of the firm is still
growing all over Europe and Scandinavia, and
the sale to tourists during the season is of great
importance to the firm. The demand for our
production is still increasing year by year. To be
able to meet the demand we have set up a new
production (factory) . . . We foresee consider-
able possibilities for more export in the future.
(Owner of a craft production and retail
company; open all year for production,
sales and marketing)
Our business has been a success, as we can
sell all that we are able to produce. We sell
our products outside Bornholm, but of course
we also have a considerable sale to tourists
visiting the area. We therefore see us as both
a sales business but also as an attraction in the
area . . . We continue to develop our products
to improve our competitiveness.
(Family-run producer/retailer of a luxury food
product; open 11 months a year)
Capitulating
Shrinking, terminating or selling a family busi-
ness in response to extreme seasonality can be
called capitulating, but it might also stem from
personal preferences or the absence of heirs.
For example, the C. family business is very
unusual in Bornholm, having been developed
and expanded successfully from a farm base,
and passed on to the third generation. How-
ever, the older married couple who own and
107
operate this attraction are selling out and their
children who have already moved off-island
do not want to take over. It is seasonal, opening
MaySeptember. Resident demand is insuffi-
cient to warrant a longer season as staff and
operating costs are quite high. They employ six
permanent, all-year staff and 50 seasonal work-
ers. Repairs, maintenance and improvements
are made over the whole year, and the owners
have always tried to add something new before
each season. The business is neither big nor
small enough to allow the owners the luxury
of relinquishing all-year management. Would
a longer season and higher profits make a
difference? It is impossible to say.
In the following example, the owners are
undecided about their business viability and its
future. The H. family opened their own craft
manufacturing and retail business on the island,
following a period of paid employment by the
husband at a (now) competing business. The
premises are rented, and both capital and
operating costs in this line of work are high.
Unfortunately, the tourism season is very short,
as their market is primarily that of longer-staying
German visitors who come mostly in the warm,
short summer. Competition is high and increas-
ing, as Bornholmseems to attract many arts and
crafts entrepreneurs. Almost all the businesses in
their little seaside community are locally owned
and have to close for a lengthy part of the year,
and while some owners can afford to go away
on vacations over the closed season the H.
family do not generate sufficient revenue. The
husband spends part of the winter off-island
to earn additional income, and they both
manufacture crafts for later sale. In the summer,
students are employed in the shop. Their child is
still at school and not employed. Although they
love living in this area, increasingly they see that
they might have to move away to earn a decent
living.
Quite a few respondents were micro busi-
nesses with no option of staying open all year,
andmany were always intendedtobe secondary
sources of income. Although some family busi-
ness owners undoubtedly prefer to close for
the season, because they are lifestyle oriented
or place the family first, the evidence from
Bornholm strongly suggests that most prefer
otherwise. The majority of business owners
surveyed and interviewed wanted a longer,
more profitable tourism season, and many
stayed open all year despite the severe downturn
in tourism demand.
In terms of impacts on the family, this
research revealed that strategies for coping
with, or combating extreme seasonality have
profound implications for the owners and
their families. Many family business owners
were apparently successfully coping by way
of seasonal closure and alternative revenue
generation, but in some cases business viability
was at risk. Most respondents would prefer to
expand the peak tourist season, as this would
undoubtedly improve their financial positions a
great deal.
One other possible consequence of extreme
seasonality on the family business was revealed
by the very low number of children involved in
these businesses and by the high level of expec-
tation that the businesses would not be passed
on within the family. This deserves further study,
as continuity in family businesses should have
positive consequences for the community and
the industry.
What remains are the following options,
directly aimed at the small and family business
sector:
Focus on building demand in the shoulder

seasons with the hope of generating suffi-
cient revenues to sustain the business and
the family.
Develop niche markets that can keep some

businesses open all year (i.e. residents,
sport tourists, business travellers).
Create export products.
Generate counter-seasonal income from

non-tourism ventures.
Chapter Summary
Owing to the widespread preference to keep the
family business small and under control, yet
profitable, owners face many challenges. This
chapter started by discussing the notions of fail-
ure and success in the family-business context,
noting that both should be viewed in the light of
owners goals and needs. It is readily observable
that small businesses in tourism and hospitality
frequently turn over their ownership or fail
outright, but it is less certain if the family vision
90 Chapter 4
108
is responsible failure can often be attributed
to generic factors affecting all small businesses,
and to the often-harsh business environment.
There are goodreasons for growing a family
business, including the additional revenues that
come from increased business volumes and the
enabling of increased family involvement in the
business including potential inheritors. Various
barriers and preconditions for growth were dis-
cussed, starting with resource availability and
encompassingthe lack of relatedvisionor goals.
Family-business owners are in need of
strategic planning, even if they want to avoid
growth. After presenting a basic strategic plan-
ning process for family firms, including the need
for parallel family and business visions, this
chapter outlined a number of generic strategies
as well as options specific to the family enter-
prise. A number of unique advantages are held
by the family business that can be exploited,
such as the ability to take a longer-termperspec-
tive on return on investment, and the special
resources families and their networks can bring
to the business. Strategic marketing was then
discussed, highlighting the need for most family
businesses to develop profitable niche markets
and to forge marketing partnerships. The pros
and cons of family branding were noted.
The final portion of this chapter was
devotedtoan examinationof strategic responses
by family businesses in Denmark to extreme sea-
sonality of demand. It was revealed that some
owners merely coped with seasonality, including
shutting down for part of the year, while others
endeavoured to combat it through diversifica-
tion of products and markets. This research
identified a number of specific strategies that
were working for family businesses inBornholm.
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5
Balancing Family and Business through the Life Cycle
Introduction
Numerous challenges and issues face the family
business, and finding the right balance between
family and business throughout the life cycle is
critical for success. This chapter examines key
challenges and issues together with strategies
and actions that are actually employed, or are
recommended by experts, to achieve a healthy
balance. It starts with a discussion of generic
challenges and issues for family business,
plus some that are specific to tourism and
hospitality. Different stages of the life cycle
are addressed, including the sole proprietor,
copreneurial arrangements, the young business
family with children, and family working
together. There are special sections on the
family and the environment, and gender
issues. Some research findings are presented to
demonstrate real concerns from respondents in
Australia, Canada and Denmark.
Later in this chapter attention is focused on
issues relating to involvement of children in the
business, leading toa detailedlook at inheritance
and succession planning. The concept of a
family legacy is discussed in this context.
Generic Challenges and Issues
A study of family businesses in the UK by Birley
et al. (1999) found three distinct attitudinal
clusters related to the balancing of family and
business:
The Family Rules Group wanted children

to be involved in the business at an early
age, and believed successors should be
chosen from the family.
The Family Out Group held opposite

attitudes towards family involvement.
The Family-Business Jugglers did not

have strong views but were seeking a bal-
ance between family and business issues.
In part, this threefold typology reflects dif-
ferent values and visions for the business. Some
owners simply do not want, or feel it important,
to involve children. For many others it is irrele-
vant because there are no available children.
However it must also be asked if those owners
who do not formally involve any other family
members in ownership or management can still
remainfree of family influences onthe business.
Carlock and Ward (2001) specifically dis-
cussed the generic problems of balancing family
needs and wants with business requirements
and opportunities. They identified five pivotal
variables requiring plans and policies: control,
careers, capital, conflict and culture.
Control
In many family businesses a single founder/
owner makes all the decisions, which is neat
and simple. Add one person to the equation,
either a spouse or child, and complications set
in. How will families working and living together
make decisions to control the business? One
idea is the family council, discussed later.
113
Careers
Are both partners in the copreneurial firm
equal in their responsibilities and rewards? Do
children or other family members get involved
on a casual basis, or develop careers within
the business? Appointment, advancement and
rewards should ideally be based on accomplish-
ments, but in some families they tend to be
viewed as rights.
Capital
Although many families struggle to eke out a
living from their businesses, others prosper.
Every family business has to face the trade-offs
between reinvesting income in the business or
harvesting it for family use, and ultimately that
of inheritance or selling the business. Will all
family members benefit equally? Money issues
can easily lead to conflict.
Conflict
Procedures are needed to identify potential
sources of conflict and to deal with them.
Because friction is a fact of family business life,
there is no advantage in hiding conflicts nor in
putting off their resolution.
Culture
A number of authors have observed the impor-
tance of family culture. For example, Carlock
and Ward (2001) described collaborative
families that work together, while conflicted
families find it difficult to get along. Dyer (1988)
identified four types of family business culture.
Paternalistic families were hierarchical with
power in the hands of leaders who are usually
the founders. The laissez-faire culture is also
hierarchical, but while family members are
given preferential treatment, employees are
given scope to implement the family vision. In
participative families, which are relatively rare
according to Dyer, the familys status is de-
emphasized in favour of group decision-making
inclusive of employees. The fourth culture was
termed professional and denotes the turning
over of management to non-family profession-
als. Dyer said that paternalistic owners often fail
to prepare their successors for leadership.
The style of founders who keep all informa-
tion and make all important decisions can be
thought of as paternalism, while Dean (1992)
and Tsang (2002) talked about autocracy as a
common leadership style associated with the
founder. The founding values tend to endure,
but might eventually be challenged and replaced
by successors. Peiser and Wooten (1983)
referred to this as the life cycle crisis which is
precipitated when goals of the founding genera-
tionandthose of the secondgenerationconflict.
Family values can be the foundation of
plans and actions, even if they are not articu-
lated. In strategic planning, however, there is
the opportunity to state the values, princi-
ples and vision that drive the family and its
business.
Seasonality and other cycles
This is an issue of particular importance to
business families in the tourism and hospitality
industry. As detailed in the preceding chapter,
extreme cyclical demand poses a potentially
fatal threat to the business and has profound
implications for the owners and their families.
Many families simply cope with the problem by
shutting down for part of the year or treating the
business as part-time and/or secondary to other
economic activities. Those that elect to combat
seasonality employ a variety of strategies that
are more entrepreneurial and often innovative,
including diversification of products and
markets even getting into the export market.
Tomany families the off-peak periods of the
business year are welcomed, and even neces-
sary, for maintaining their mental and physical
well-being. McGibbon (2000), writing about a
resort community in Austria, observed that work
routines are less intense in the summer than in
the peak skiing season, for both genders. Moth-
ers enjoyed more time with their children, and
whole families could spend more time together.
As noted by Twining-Ward and Twining-Ward
(1996), destinations and residents might benefit
from low-demand seasons in several ways:
residents might need and welcome a

period of rest;
environmental pressures are reduced,

and recuperation is possible in damaged
environments;
infrastructure can be repaired or improved;

and
96 Chapter 5
114
traditional social and cultural activities can

be resumed.
Whole communities have to make the sea-
sonal adjustments. Those that become all-year
destinations gain in economic terms, but suffer
from the expansion of other problems.
It might be a useful line of research to
compare all-season resort communities and
rural/peripheral areas with extreme seasonality
on various economic and socio-cultural impact
measures, with family issues clearly in focus.
Presumably many families in business are
equally pressured by weekdayweekend
fluctuations in demand.
Family business and home life
Numerous families operating tourism and hos-
pitality businesses share their home space with
customers, and this impacts substantially on
their work and family life. As well, high-contact
services are provided by many family busi-
nesses, regardless of location. Consequently,
hostguest relations have been identified as an
important issue in the tourism and hospitality
literature.
Lynch and MacWhannell (2000) have
examined the relationships between home
and commercialized hospitality. They identified
three types of home accommodation, namely:
(i) within the family home and sharing public
spaces (such as B&B establishments); (ii) the
owner lives on the premises but in separate
quarters (as in many hotels); and (iii) the owner
provides self-catering rentals in accommodation
sometimes used as a second home. One could
easily extend that typology to cover the
many owners who provide completely separate
accommodation units but are directly involved
in their operation and maintenance and
therefore contact guests regularly.
Several themes in the literature were
identified by Lynch and MacWhannell (2000),
including a feminist perspective on womens
work, female entrepreneurship, social relation-
ships, and the home as refuge. Those authors
(p. 111) suggested that researchers . . . might
wish to rethink traditional business strategy
concepts when analysing and devising policies
for small accommodation enterprises in order to
reflect the importance of home and its influence
on business strategies.
Family business owners, especially women
(see the gender section, following), have fre-
quently complainedtoresearchers of long hours,
minimal financial rewards, and disruptions to
family and community life. Stringer (1981),
based on a study of B&B establishments,
observed that the relationship between hosts
and guests extended beyond remuneration and
included social elements. The ability to preserve
privacy is a major issue when the home environ-
ment is offered to visitors (Stringer, 1981).
McGibbon (2000) found that women
running guest houses in St Anton, Austria, had
little free time and worked long hours in the
peak winter tourism season, leading to sleep
deprivation. They also suffered from a lack of
private space, as guests failed to respect private
designations.
Kousis (1989) studiedtourismdevelopment
in rural Crete, revealing growth in family tourism
businesses by spouses, with children and parents
helping out. Social activities of families were
affected, and parents helped newly-weds to
set up businesses. Females ran most of these
family tourism businesses, with men working
elsewhere.
The Western Australian research by Getz
and Carlsen (2000) documented areas of
satisfaction and difficulty among rural family
business owners. The positive features stemmed
from working together as a couple or family,
pride in the business, pleasing customers,
and independence. Major perceived difficulties
included time pressures (e.g. lack of free time or
time with partners), balancing family and work
life, and the need to find space away from
customers.
A study by Mendonsa (1983) of family
tourism businesses in Portugal concluded that
running tourism businesses put considerable
strain on families, and especially on the women
who did most of the work. Mendonsa (1983:
235) found that families have consciously
altered their patterns of behaviour in order to
cope with and benefit from tourism.
The family life cycle
Many of the balancing challenges and issues are
specific to stages in the family life cycle, includ-
ing the unique situation facing sole proprietors
Balancing Family and Business 97
115
who might or might not involve family members
or consider family implications. Although
mentioned here, the crucial issue of involving
potential heirs and the succession process is
dealt with later in this chapter.
The sole proprietor
The sole proprietor might be a founder without
family, or an entrepreneur who keeps family
and business as separate as possible. Never-
theless, many do involve family members
informally and others will eventually have to
face the fact that their business and family
affairs are overlapping. Hegarty and Ruddy
(2002: 16) observed in Ireland that Entrepre-
neurs operating their enterprise single-handedly
tend to rely on family support at a secondary
support level through employment. Some-
times, working for the owner was considered
to be a favour or an obligation.
Copreneurs
Numerous married couples operate businesses
together without the involvement of children.
Hegarty and Ruddy (2000: 16) found that 36%
of their Irish sample were spouses or couples
working as partners, with one not being subser-
vient to the other. Baines and Wheelock (1998)
reported that in half of their sample of micro-
businesses, both husbands and wives, were
highly involved and that distinct gender roles
were observable. Women tended to provide
formal administration, marketing and secretarial
services and men offered technical support. As
evidenced from the literature cited, and the case
studies contained in this book, gender roles can
evolve naturally from roles performed before
the business, or can be a function of who starts
the business and its nature.
Couples might be in the pre-family stage,
empty-nesters engaging in a career switch to
fulfil a life-long ambition, or older adults in
the retirement or pre-retirement stage of life. A
special case encountered by the authors is the
homosexual couple running a business. These
arrangements are more widespread and numer-
ous than might be thought, mainly because the
literature has ignored this phenomenon. Indeed,
many researchers would not even consider
single-sex couples to be a family, yet increasingly
they are gaining family-equivalent legal status
and many do have children.
For couples, the principle challenges are to
find ways to work together as partners, and this
might be the very attraction of establishing the
business. It can be difficult to escape stereo-
typical gender roles in copreneurial businesses,
particularly because the tourism and hospitality
industry is full of so-calledwomens work. Inthe
Western Australian sample (Getz and Carlsen,
2000), a goal was for couples to be working
harmoniously together. Finding equal-value
tasks for husbands and wives was also a major
consideration.
The young business family
When children are young the founder or couple
running a business have special challenges.
McGibbon (2000: 171) noted that Running a
business at home is particularly stressful when
children are young, which often coincides with
when couples are building up their business.
Unique problems facing the accommodation
provider might include children being displaced
from bedrooms in order to accommodate
paying guests, an inability to keep guests
and children physically apart, and exposure of
children to unruly guest behaviour. In many
hospitality situations children will be exposed to
guests drinking and partying.
Marriages will be strained when women
have a disproportionate share of the burdens
of managing both family and business. Making
joint decisions about the balancing of work and
family life is therefore a necessity. Sometimes
working out relationships withthe extendedfam-
ily will become an issue, especially where more
than one generationlives together. The presence
of grandparents can, for example, provide
essential baby-sitting or cause additional stress.
Family working together
Massachusetts Mutual Life Assurance (1993)
found that in 81% of family businesses in
the USA some family member(s) worked on a
day-to-day basis, with spouses and sons most
often involved. Working with family members
poses a number of challenges, typically related
to couples sharing the responsibilities and par-
ents working with children. As noted by Cromie
98 Chapter 5
116
et al. (2001), family members are simulta-
neously members of a family system with
relationships based on affection and other
family bonds, and a work system organized on
the basis of threat and exchange. This can
cause role conflicts, and they cannot be left
behind at the office.
Children growing up within a family busi-
ness environment might be exposed to guests
and the services provided by their parents at a
very early age. Our case studies show that in
some families it is considered normal and appro-
priate that very young children have the run of
the establishment, meet and even entertain
guests, and do odd jobs suitable to their ages. If
the children are interested they might eventually
receive remuneration for their contributions, but
the parents we interviewed were very concerned
about the differences between casual (helping
out) and formal (paid) involvement.
Strategies for balancing family and business
A number of strategies or actions are suggested
in the literature and in our case studies for
balancing family and business life.
Boundaries
For many families in tourism and hospitality
businesses it is difficult (some feel it is
impossible) to separate work and family life.
Yet boundaries might have to be established
to sustain a healthy familybusinesses balance.
The literature and case studies suggest some
options:
Fences. The old adage that good fences

make good neighbours probably also
applies to hosts and guests. Physically
separating home from the visitors
environment will at least discourage over-
familiarity and possibly result in a psycho-
logical differentiation as well. If home is not
a refuge from ones guests, it will cease to
be comfortable.
Locks on the door. B&B operators, and

others who share their living space with
paying guests, have to lock out their guests
from private quarters. Signs have to be
posted saying private, or intrusions will
occur. This imposes a serious obligation,
however, because someone always has
to be on call for emergencies. Will guests
know where to turn for help?
Employees. Hands-on owners enjoy their

craft, but frequently need relief that only
paid staff can provide. It is both a matter of
money (can we afford employees?) and
trust. Family business owners trust other
family members the most. Small hotel
owners in England were found to employ a
minimum of paid staff from outside their
immediate family, and as a result family
members at most operations reported very
long working hours at least 50 hours a
week (Hankinson, 1989).
A common worry about family firms is that
family members not only receive preferential
treatment, but that each family member can act
like a boss over staff. However, Cromie et al.
(2001) surveyed family firms in the Scottish
Highlands and Islands and found that, contrary
to the literature, roles were generally allocated
clearly to family members and to staff, thereby
minimizing disagreements.
Dunn (1995) reported that many family
business owners not only felt a strong sense of
responsibility for their families but also for their
employees and their families. This community-
minded spirit might be expected to be particu-
larly important in rural or small-town areas
where families are deeply rooted and everyone
knows everyone.
Time management
Certain times of the day, week and year have to
be reserved for privacy and family affairs. There
will always be the temptation to keep working,
always to be on call, or never to delegate
responsibilities, yet private time has to be
found. Employees hired to free up time might in
fact become a burden if they require training
and supervision. Technology should be used to
save time, but learning how to use it is often
very time consuming.
Attitude
A business owner can be both professional and
friendly and at the same time communicate to
customers the need to preserve private time and
117
personal space. This is a skill that presumably
can be learned, but is also a reflection of
personality.
Formal mechanisms
Carlock and Ward (2001) describe the Family
Enterprise Continuity Plan, and it has been
described in the strategic planning section.
Family meetings are suitable for small families,
while formal Family Councils might be required
for larger enterprises or where more than one
family branch is involved. Conflictresolution
measures might be needed, including the role
of an external arbitrator. Family businesses
with boards of directors might have this function
built into the boards responsibilities. In other
words, directors will be trusted to help resolve
family disputes.
Formal Family Agreements are another
tool. They establish principles, rules and
procedures based on family consensus, and can
thereby carry the weight of a constitution. Ideally
they are understood and adhered to by all family
members. Changes are made only after due
deliberation and input from all the stakeholders.
A specific example is the rules governing family
employment, remuneration, advancement and
ownership. This is only likely to become
controversial when more than one child is
involved, and could be an issue when many
family members are potentially employable in
the business.
Acode of conduct might be desirable, either
within or separate from the family agreement.
What are the expectations for behaviour, both
among family members and between the family
and customers or other stakeholders? The code
is a good tool for fostering a positive working
environment, a strong customer orientation, and
avoiding many potential conflicts.
Family business and the environment
Another balancing act occurs between the
family business and the environment. This issue
of environmental responsibility could also be
considered under the heading of family culture,
or strategic planning: do family businesses
make better stewards of natural resources and
the environment because they are owned and
operated by families?
Carlsen et al. (2001) examined data from a
survey of Western Australian family businesses
fromthe perspective of sustainable tourism. The
basic premise to be tested was that families and
owner-operators would be inclined to protect
the resource base upon which their (rural)
businesses were founded; some support was
found for that hypothesis. Researchers in Spain
(Garcia-Ramon et al., 1995) concluded that
women in farm tourism businesses developed
new attitudes in support of preserving the
physical and cultural landscape. On the other
hand, McKerchers (1998) evaluation of nature
tour operators in Australia, all of whom were
owner-operators or family businesses, revealed
a disturbing practice. Some of these small busi-
nesses willingly accepted fines for disobeying
park regulations on visitor numbers in order to
profit from higher volumes of customers.
Lynch (1996: 233) argued that B&B
establishments fit squarely into the concept
of sustainable tourism. They preserve old
buildings, may help improve the housing stock
and have low environmental impact. Genuine
hostguest interaction is facilitated, and they are
very flexible forms of accommodation. This logic
should extend to almost all small, family-owned
accommodations.
Twining-Ward and Baum (1998) observed
high degrees of local ownership of tourism and
hospitality businesses on three Baltic Sea islands
and concluded that this was advantageous in
reducing leakages. They argued that local own-
ership also gives the islands more control over
cultural and environmental protection. While
not specifically addressed by those authors, it is
clear that local ownershipandcontrol stems from
owner-operator and family businesses.
Herreman and Welsh (1999) prepared a
case study of a family-operated ecotourismbusi-
ness in which the founders values and goals led
to a high degree of environmental sustainability.
The family in question has ties to the area in
Alberta, Canada extending back five genera-
tions. Other evidence concerning the impor-
tance of personal or family values has been
provided by Ateljevic and Doorne (2000) based
on research in New Zealand. They concluded
that some entrepreneurs, whom they call life-
style entrepreneurs, consciously limit the scale
and scope of their businesses in order to balance
economic performance and sustainability in
100 Chapter 5
118
sociocultural and environmental terms. In partic-
ular, they want to be close to nature (e.g. cave
rafting) and involved in community life. To sur-
vive requires capturing a viable niche market,
and re-conceptualization of success to encom-
pass non-economic measures. The researchers
also observed that while innovators were
lifestyle-oriented, later imitators were more
focused on profit maximization.
Gender Challenges and Issues
Several books and a special issue of the journal
Annals of Tourism Research have been devoted
to gender issues in tourism. Major themes
include the predominance of females in certain
occupations and enterprises, motives of women
establishing a business, costs and benefits,
impacts on the family, barriers to female
entrepreneurship and a feminist perspective on
power, exploitation and development.
Many researchers have noted the pre-
ponderance of women operating small tourism
and hospitality businesses, typically accommo-
dation, and the evidence comes from many
countries and regions (e.g. Walton, 1978;
Stringer, 1981; Whatmore, 1991; Cukier et al.,
1996; Lynch, 1996). For example, Armstrong
(1978) determined that the B&B accommoda-
tion sector in the Scottish Highlands was
primarily associated with women because of
the supposed domestic nature of the service.
Armstrong also noted that these women had
difficulty being heard in the public domain
and so had to establish their own voluntary
organization in order to lobby.
Danes (1998) concluded that farm tourism,
as well as off-farm work, can be motivated by
womens desire for increased status. Quinn et al.
(1992), studying female entrepreneurs in
hospitality in Northern Ireland, determined
that self-employment offered a better choice
for wives and mothers, perhaps related to
frustration with a previous job, but for many the
business was a realizationof a lifelong ambition.
A detailed study of family-operated hotels
and pensions in St Anton, Austria by McGibbon
(2000) found most to be run by women, while
the men of the household sought employment
outside the home in tourism (e.g. ski instructors
or mountain guides), other sectors, or even other
family-owned business (such as retail or taxi
services). For these business-women, the distinc-
tions between public and private space, employ-
ment and housework, work and leisure were
unclear. The Baurenhof figures prominently in
this environment, being the large combined
home and commercial accommodation that
supports the extended family and is intended to
be passed down through the generations.
Values underlying this system are deeply
rooted in the Tyrolean culture. In addition to
the long hours of hard work and interference
with motherhood and family duties, the female
accommodation-operators of St Anton some-
times faced a more serious problem. According
to McGibbon (2000), husbands tend to ignore
the daily operation of the hotels and pensions,
but do insist on controlling the finances and
holding ownership. Many women who operate
these businesses are legally considered to be
employees. Over time, however, young people
in St Anton are deciding not to take over
such businesses but to pursue education or
employment elsewhere.
Jennings and Stehlik (1999) interviewed
women involved in farmtourismin Queensland,
Australia, and determined they all wanted to
earn extra income for families under financial
stress. As well, some enjoyed the work and
especially the resultant socializing, while others
reported feeling more worthwhile. A number of
problems or challenges were also generated.
These often stemmed from the increased work-
load, including interference with farm work and
family time. They also reported a loss of privacy
and the intrusion of other priorities into their
lifestyle. Female entrepreneurs were not always
supported by their partners, giving rise to poten-
tial stress or conflict. As well, some of them
needed information or training with regard to
their new business ventures.
Researchers have written about female
entrepreneurs in farm-based tourism in Spain
(Garcia-Ramon et al., 1995; Caballe, 1999;
Velasco, 1999). The studies revealed that all
such businesses were initiated and operated by
women who tended to be married, with children
at home. Some were residents trying to supple-
ment farm incomes and some were in-migrants
from cities who prefer to live in the country and
have taken up farm-tourism as their primary
source of income. Many Spanish women in
119
these entrepreneurial positions had limited job
opportunities and often poor accessibility, so
they preferred working at home where flexibility
was permitted.
Several family-related issues were
observed, including potential opposition to the
business, the need to consult with husbands
on all economic decisions, and the delegation
of certain tasks to other family members.
Husbands, mothers and children contributed in
various ways, although it was the women who
started and took responsibility for the tourism
enterprise. Perception of increased economic
independence and self esteem were recorded.
Caballe (1999) concludedthat gender roles were
modified and that women can take on new eco-
nomic and social roles through involvement in
farm-tourism.
Velascos research on ten women entrepre-
neurs in Andalusia, Spain (1999), found that
farm-tourism businesses were initiated to earn
extra money and to refurbish the home. The
sample were all married or in relationships, with
children. Most (six out of ten) did not participate
in farm activities, and their characteristics and
behaviour were thought to be unorthodox in
cultural terms. Rural tourism took place mostly
on the weekends, and seasonality also greatly
affected their lives. Despite hard work, and
resentment at being tied to the farmhouse while
other family members enjoyed leisure time, res-
pondents were usually quite positive about their
work and displayed a high level of satisfaction.
Long and Kindon (1997) assessed Balinese
village tourism and found that all but one of the
25 homestay establishments they surveyed were
owned by resident couples. Half were staffed by
family members alone, seven by hired labour,
and three by a combination, but women in the
household did the hospitality work even though
males and females co-managed the businesses.
Males were mostly employed elsewhere. Gener-
ally, tourismdid not alter existing gender-related
social and family patterns.
Scott (1996) studied a number of family
accommodation businesses in northern Cyprus,
a culture in which there was no tradition
of female entrepreneurship. She found that
the accommodation places families operated
were separate from their personal homes, and
that pluriactivity (multiple employment) was
common. Only a few women actively managed
the establishments, and males and females
tended to hold other jobs.
Breathnach et al. (1994) sampled female
B&B operators in Ireland whose greatest dislikes
were long hours and being tied down by the job.
Meeting people was a benefit, and the work
suitedtheir lifestyle. Leontidou(1994) examined
the impacts of seasonality on Greek women
in business, many of whom had to dismantle
their homes seasonally in order to let themout to
tourists. Dernois (1991) study of farmtourismin
Austria revealed that 81% of the women invol-
ved in tourism also had to participate in farm
work, and almost all of them had housework.
Walker et al. (2001) determined that
trekking in Nepal resulted in numerous
lodges and teashops being created, with women
managing a majority and owning some of them,
but females do not have control over family
income, so they are limited in starting a business
independently. Out-migration of males had
created a niche for women to fill, plus capital
could sometimes be obtained from men who
had migrated for their families to start the
business. One consequence is that womens
status has improved in both the family and the
community. Another benefit is that women were
freed from farm work and felt an increase in free
time, especially in low demand periods.
Much of the gender-specific research has
focused on small-scale accommodation estab-
lishments where women are the predominant
entrepreneurs. In these businesses sometimes
only the females of families participate, because
in many cultures hospitality is perceived to be an
extension of housework (i.e. so-called womens
work). There is ample evidence to conclude that
these female entrepreneurs have different issues
to face, but on the matter of motives and goals it
is not clear that they differ from males. On this
point, the Western Australia (Getz and Carlsen,
2000) survey found no significant differences
between males and females in their motives
for start-up, growth and ultimate disposition of
the business. However, that research included
mostly copreneurial couples, so it is possible that
women working alone to establish or operate a
business will have different goals.
While it is helpful to look at female-specific
issues, especially in the context of fostering
entrepreneurship and potential benefits for
development in general, family business studies
102 Chapter 5
120
are more about family relationships. Conse-
quently, more research has to be devoted to
couples as business partners, and to issues facing
sons and daughters within family businesses.
Research Evidence from Western
Australia
Results of this research by Getz and Carlsen
(2000) shed light on a number of family-related
issues. The methodology and other results have
been presented elsewhere in this book.
Family-related goals
Respondents were asked, How important were
the following family-related goals for you?,
using a five-point scale from not at all important
to very important. The most important family
goal was the sharing of key decisions, which
82% of respondents (the majority of whom are
co-owning spouses) indicated was somewhat
important or very important (mean = 4.34).
This relates closely to the goal of preventing
disharmony among family members (73%rated
it as somewhat or highly important; mean =
3.86). Earning enough money to support the
family was rated fairly highly, as 68% rated it
as somewhat or very important (3.86).
Least important was elevating our family
position in society (mean = 1.18), although a
small percentage did find it important. Creating
employment for family members and training
children for future ownership of the business
were also of minor importance overall. The
largest neutral or uncertain response was for the
goal ensure the family has lots of free time
together. It was somewhat or very important to
only half the respondents, so either a lot of
respondents were uncertain whether they were
going to be able to have a lot of free time
together, or it was not a major concern. To some
extent time spent working together might obvi-
ate the needor desire for families tospendleisure
time together, and a complete break from the
family unit might be more appropriate for some
of the respondents.
Respondents were also asked to include
other important family-related goals for the
business. A total of 62 were listed, from which
several groupings seem to be important. The
largest (14 mentions) was related to the enjoy-
ment of working together or allowing time to
enjoy the family. Eleven pertained to having
children growing up working in the business.
Sharing the financial reward with family was
mentioned by eight respondents, as was having
work that suited ones lifestyle. Another seven
specifiedthe ability toshape childrens education.
Satisfaction and problems
A great deal of insight into the nature of the
business can be gained by examining what
aspects of the business generated the greatest
satisfaction or difficulties. Responses on satisfac-
tion can be grouped into three main themes:
working as a family (time spent working
together and team work); pride in the business
(of ownership, developing the business and
satisfying customers); and independence, or
making ones own decisions.
Expressed difficulties of family businesses
can also be grouped into several themes. The
most important are time-related: the number of
hours worked; lack of free time, and time lost
with partners. Related to this problem is the
difficulty in balancing work and family life, and
the need to find space away from customers.
Another theme is that of internal family conflicts,
specifically over goals and agreement on solving
problems, plus the issue of finding equal worth
within the family business or within the family in
general. Specific business problems were also a
theme, including doing the administrative and
financial tasks, marketing and promotion, and
providing good service at all times.
Nature of the business
Two important elements relating to the nature
of tourism businesses were examined. Season-
ality of demand is a typical rural tourism
problem, and in this sample 61% agreed or
strongly agreed that their business was highly
seasonal. Another 17% were uncertain, which
possibly reflects the newness of many of these
businesses. The main problems presented by
121
seasonality relate to cash flow and overall
profitability, but it does offer families a lull
during which pursuit of family and lifestyle
goals can dominate.
Close contact with customers is central to
small hospitality and tour companies, and is
almost inescapable in B&B operations. Some-
times this causes trouble for owners, resulting in
stress and a desire to separate themselves from
their guests, whilst others crave meeting new
people and engaging them in conversation. Of
this sample, 37.5% disagreed or strongly dis-
agreed that In this business customers cannot
be separated from personal life (mean = 2.97),
while 36%agreedor strongly agreed. This mixed
result could indicate real differences in business
or merely of perception. It can be interpreted
better by looking at responses to the statement
I come into daily contact with customers,
to which fully 80% agreed or strongly agreed
(mean = 3.92).
Involving the Next Generation and
Succession
It seems ironic that the core of family business
literature concerns the succession issue
(Sharma et al., 1996) when, in fact, so few
businesses are inherited (Ward, 1987; West-
head and Cowling, 1998). Beckhard and Dyer
(1983) said that 90% of all businesses in the
USA are family businesses, and research shows
only 30% survive past the first generation. In
Sweden, only 15% of businesses are expected
to be inherited, while in Germany the figure is
37% (Bjuggren and Sund, 2001). For the UK,
Handler (1994) and Stoy Hayward Consulting
(1999) claimed that only 24% of family busi-
nesses transfer to the second generation and
14% reach the third.
What are the reasons for this low level of
inheritance? There is a large body of literature
on the succession process, and generic barriers
to inheritance have been identified. However,
it is probable that barriers vary in nature or
importance by industry, type of business and the
business environment. In tourismand hospitality
a number of unique business opportunities exist
and peculiar environmental forces make it both
attractive to family businesses yet difficult for
success and inheritance.
Inheritance is not necessarily a good or bad
thing. It might be expected in some cultures that
land and business assets are to be passed on to
the next generation, while in others the emphasis
will be placed on enabling children to pursue
their own interests. Inheritance can enable
families to build a strong company over time, but
also might result in stagnation if no changes are
made, or in intra-family conflict regarding own-
ership and wealth. The low level of succession
within family businesses is important for a
number of reasons. First, it is uncertain if this
fact reflects a failure on the part of owners, or is
not important to parents or children, or even that
parents do not want children involved. If it is a
failure, reasons must be identified and strategies
put in place by the owners to combat barriers.
The legacy
Legacy means that which is bequeathed in a
will, typically real property or money, but it can
also refer to something more intangible, such as
a family legacy of values, or of knowledge and
contacts that can assist subsequent generations
in running the business. Many people focus on
the legacy of land, and those with close ties to
the land such as farmers often have a strong
desire to ensure it is inherited.
The number of family businesses that
get inherited is most likely on the decline in
developed nations. For example, evidence from
Ireland (Hegarty and Ruddy, 2002) suggests that
family take-overs are rare, with rural tourismand
hospitality businesses started by women who
marry and then migrate, or owners following
lifestyle and locational preferences. Another
likely reason is that young people in many
countries are better educated than ever before,
and have more choices available to them. Also,
most family businesses are not started out of
necessity, but out of choice. People are less tied
to the land or their home community than ever
before, and mobility for education, work and
pleasure continues to increase.
Yet in certain families, the idea of building
a legacy or of continuing the family business
tradition remains strong. Why is that? Carlock
and Ward (2001: 19) reported on a survey
of 75 family-business owners and spouses
who were specifically working to ensure family
104 Chapter 5
122
perpetuation of their businesses. These people
believed that ownership benefits the family,
and might keep it together. Their children could
enjoy the same opportunity for wealth, freedom
and growth that they experienced. Inheritance
would also perpetuate the familys tradition and
business heritage.
The business owners pride appears to
be important, although pride is not something
everyone will admit to. Assuming the business
is a success and wealth has been created, the
owners can certainly be forgiven for feeling that
this accomplishment should not be lost or squan-
dered away. This might explain some aspect of
the desire for children to take over the business,
and might lead to problems when the parents
expect more than the children wish to give. Obli-
gation might motivate some children to assume
the family business. It can be a negative thing, as
where parents drill their children to feel obli-
gated, or a positive thing arising froma belief that
other family members are dependent on them.
A related concept, or ideal, is that of stew-
ardship. Carlock and Ward (2001: 145) des-
cribed this philosophy as the values and vision
that each generation should pass on the business
in a healthier and more valuable condition. Thus,
owners become stewards who think about all
subsequent generations. For example, the family
council would explicitly consider the impact of
decisions not only on short-termbusiness perfor-
mance but on the assets (tangible and intangible)
available for all future generations. This is akin to
the goal of ensuring inter-generational equity
that underlies sustainable development, and it
encourages very long-term thinking.
In Christian doctrine, individuals are
encouragedto be goodstewards of the earth. In
the case of farmland and other rural holdings,
children might very well grow up with a strong
attachment to the land, or to nature in general.
This can motivate themin later life to protect and
sustain the resources. The notion that family
businesses might be more environmentally
conscious is explored elsewhere.
Is the desire for creating or perpetuating a
family legacy based on race, ethnicity or culture?
Will it become increasingly rare in a globalized
economy? Can it be fostered through education
or indoctrination by parents? These questions
have not been adequately addressed by
researchers.
Barriers to Inheritance
A number of generic barriers to inheritance are
discussed in this section, with industry-specific
research evidence following.
Absence of heirs
Inheritance presupposes potential heirs within
the family, but sometimes they do not exist or
cannot be considered. In cases where there are
no children owners can look for heirs in their
wider family, but many will simply not even
consider the possibility of succession.
What has not been addressed in the litera-
ture is the question of whether or not certain
types of business or business environments
facilitate a greater or lesser degree of family
involvement and potential inheritance.
Life-stage factors
The absence of viable heirs might relate to
life-stage factors. Demographics play a part in
determining the probability and nature of inher-
itance or joining a family firm. Davis (1968)
considered life-stage and succession, noting
that sons aged between 17 and 25 preferred to
break away from family businesses in order
to create their own identity. Davis and Tagiuri
(1989) suggested that children in their 20s strive
for independence and success in the profes-
sional world, while fathers in their 40s may be
confronting mid-life anxieties and doubts about
their achievements, leading to intergenerational
conflicts.
Through examination of student intentions,
Birley (1986) found that older students had a
higher interest in joining their family firm. Firm
size did not affect intentions, nor did gender or
birth order. Cory (1990) believed that offspring
made up their minds about joining the family
business by the time they reachedteenage years.
Ward (1987) identified the ideal transition
period for a family firm, namely the time when
parents are in their 50s and children are 2733
years of age. However, it is quite possible that the
childrenhave already made major commitments
by the time they turn 27, thereby precluding
(re)involvement in the parents business.
123
Many businesses are created by older entre-
preneurs, perhaps as a second career or even
with retirement in mind. In these cases there
might never be an opportunity for children to get
involved, or the potential heirs might already be
committed to other careers and locations.
The dream dies
Lansberg (1999) highlighted the importance of
a shared dream in shaping succession within
family businesses. This dream is a . . . collective
vision of the future that inspires family members
to engage in the hard work of planning and
to do whatever is necessary to maintain their
collaboration and achieve their goals (p. 75).
While the dream is clearly a powerful force in
leading to inheritance, it is not a given constant
in all family businesses.
Attention has also been paid to the next
generations perspective, such as A. Patricks
(unpublished, The Fielding Institute, 1985) study
of childrens satisfaction and working relation-
ships with their owner-fathers. Blotnick (1984)
concluded that there is high resistance on the
part of children to being in the parents business.
Handler (1994: 141) argued that positive suc-
cession experiences for children flow from ful-
filment of three needs (career interests, psycho-
logical needs and life-stage needs) and from
relational influences (between generations and
siblings, commitment tofamily business perpetu-
ation, and separation strains owing to family
involvement).
An international survey of university
students by Stavrou and Winslow (1996) dis-
covered that they had a lowdegree of willingness
to participate in their family firms, and most
wanted to start their own. Males were more will-
ing to consider the option of joining the family
business than were females. Stavrou (1999) later
surveyed 153 college students in the USA con-
cerning voluntary intentions of joining the family
firm. The majority had no intention to join
(except among Asian respondents), and the
main reasons were as follows: preference for
other opportunities; desire to create their own
business; need to discover their interests or
prove their capabilities; pursue education; and
develop their own identity. It is noteworthy that
these reasons are based on preferences.
Founders reluctance to let go or to
plan for succession
Davis and Harveston (1998) conducted a
large-scale study of succession planning
processes among family businesses, especially
the influence of the family on the process
across generations. Some potential barriers to
succession were identified, including:
Conflicts arise when family and business

roles have not been clearly defined.
Generational envy.
Family politics spill over into business,

resulting in conflicts that impede sound
business decisions.
They suggested that owners wanting a
smooth succession should employ more close
family members in positions of responsibility, as
they become the main voice of the family. The
corollary might be that owners operating the
business without family involvement at a high
level will find it more difficult to pass on the
enterprise.
In a major review of the literature on
succession, Handler (1994) examined different
research approaches and theoretical perspec-
tives on the succession process and concluded:
The ongoing health of the firm, quality of life,
and family dynamics are critical to the success
of the succession process. (p. 134). The role
of the founder, and underlying psychological
factors, is also critical to the process. Founders
might be reluctant to let go of power or
to prepare potential successors and heirs
adequately (Lansberg, 1999).
Handler and Kram (1988) presented a
model of resistance to succession in family
businesses, juxtaposing factors promoting
resistance with factors reducing resistance. At
its core is succession planning, and pertinent
resistance factors were categorizedas following:
individual level (owners and children);
interpersonal group level (trust, communi-

cation, power);
organizational level (culture, stability,

structures); and
environmental level (influences on the

business).
Heirs actively and capably involved in
the business, and one child as potential
106 Chapter 5
124
heir were identified as factors reducing
resistance.
Negative perceptions of the business or
the work environment
Alcorn (1982) said that negative impressions of
the business while growing up discouraged
many children from joining a family business.
Negativity might stem from observations of
parents working hours and conditions, or the
absence of money. There is also debate in the
literature about the influence of entrepreneurs
on their childrens values and goals: do such
parents provide good role models or does the
experience of working in a family business turn
children off the prospect of taking over?
Birley (2002) concluded from research on
potential heirs that the top reason for not joining
the family firm was a lack of interest in that
particular business, followed by perceptions that
the business would not allow the children to use
their talents or training.
Gender and culture
Gender is sometimes an impediment, with
daughters being treated prejudicially (Dumas,
1992; C. Iannarelli, unpublished, University
of Pittsburg, 1992). Some researchers have
concluded that first-born children, particularly
males, are more likely to join and inherit a
family business (Goldberg and Wooldridge,
1993). Daughters in many cultures apparently
are less likely to get involved or be assigned
important duties in family businesses.
The business is not viable
Involvement and inheritance by other family
members might be precluded by the business
itself. Many small and micro businesses are
likely to suffer from low turnover and profits, or
periodic cash-flow problems. This barrier could
be absolute, as in the case where a great debt
load or tax burden makes inheritance of a going
concern impossible, or a matter of degree
potential heirs perceive the business as lacking
potential to support successors. Bjuggren and
Sund (2001) argued that both taxes and legal
matters were barriers to inheritance in Swedish
firms.
Research Findings from Australia,
Canada and Denmark
The research methods and profiles of these
three samples of family businesses have already
been described. In this section the data pertain-
ing to involvement of children and succession
plans are examined.
Western Australia
Almost half (46.5%) of the respondents were
uncertain about the ultimate disposition of their
family business. One-fifth had no plans to keep
it within the family, while one-quarter planned
to will it to children or family members upon
their death. A small portion (1%) had already
involved children in ownership of the business,
while another 7% planned to do so by means
other than a will. In total, only 33% were
planning to involve, or had already involved,
children or other family members in ownership.
Children worked in only 23% of these
businesses.
Canmore and Bornholm
Family-related goals are shown in Table 5.1.
Training children for future ownership of
the business was considered to be important
(combining the number who indicated four and
five on the five-point importance scale) to only
about 21% of the Danish respondents and 15%
of the Canadians. Providing jobs for family
members was also more important in Denmark,
with about 37% rating it highly compared to
15% in Canmore. On the inheritance question,
just over 21% of those in Bornholm and 17% of
the Canmore respondents thought it important
to pass on the family business to children/
family.
125
Extent of family involvement (Table 5.2)
In both resort areas the businesses were very
small, with mostly just the owner(s) being
employed. In Bornholm less than half had
non-family, full-time, paid employees; only 11
involved children, and seven others involved
other family members beside spouses. Compa-
nies (as opposed to other ownership forms)
and non-accommodation businesses had
more paid, full-time, non-family employees. In
Canmore, less than half had employees, only
12 involved children and five involved other
family members beyond a spouse. Those
Canmore businesses owned by companies
have more employees, and these are primarily
hotels, restaurants, and to a lesser extent tour
companies. None of the B&B establishments
had non-family, full-time paid employees.
Only a very small number of respondents
indicated that keeping the family together or
preserving family property was an important
start-up goal. Those that planned for growth,
or were best able to deliver it, were clearly in
the minority. However, because of their desire
to grow the business they might very well be
the most likely to create a viable inheritance
scenario.
Problems regarding inheritance, and
succession plans (Table 5.3)
Among the Danish respondents taxes were
thought to be a serious problem by 50% of
those answering a question about barriers to
inheritance (there were 1820 respondents).
About one-quarter of the respondents thought it
serious that the children either did not want to
live there or did not want to own the business.
There was also a suggestion that the business
could not support children financially, as 42%
determined it was somewhat of a problem. In
Canmore the highest-ranked item was taxes,
which attracted 48% of the respondents in the
somewhat of a problem category.
Disposition plans (Table 5.4)
Disposition plans were explicitly examined for
all respondents. Most were uncertain about the
108 Chapter 5
Goals
Bornholm
(% rating the goal
important)
(n = 2831)
Canmore
(% rating the goal
important)
(n = 4649)
Prevent disharmony among family members
Share all key decisions with the spouse or family
Train the children for future ownership of the business
Provide family members with jobs
Share the work equally with my spouse
Pass on the family business to children/family
Earn enough to support the family
Elevate our family position in society
Ensure the family has lots of free time together
73.3%
74.2%
20.7%
36.7
a
46.7%
21.4%
67.7%
16.7%
27.6
a
81.3%
71.4%
15.2%
14.9
a
37.2%
17.0%
75.0%
12.5%
75.5
a
a
Significant differences between the samples.
Table 5.1. Family-related goals, Bornholm and Canmore.
Extent of family involvement
Bornholm
(n = 84)
Canmore
(n = 99)
No other family members work in the business besides me
A husband and wife work together in the business
One or more of the owners children work in the business
Other family members beside spouse or children work in the business
30 (35.7%)
41 (48.8)%
7 (8.3) %
7 (8.3) %
25 (25.3%)
64 (64.6)%
5 (5.1) %
5 (5.1) %
Table 5.2. Family involvement, Bornholm and Canmore.
126
future of their business, but it can be concluded
that this uncertain group (50 of 84 in Bornholm
and 62 of 99 in Canmore) do not include many
viable inheritance scenarios. In fact, the biggest
response category was that the business will
be sold, but not to children or family. The one
significant difference in this comparison was
that eight respondents in Bornholm definitely
planned a sale or transference of ownership
to family or children, compared to none in
Canmore. In addition, there were five in Born-
holm and four in Canmore who were planning
to will the business to children or family.
By totalling the three responses related to
inheritance it can be seen that it was occurring or
planned in 15 of 84 in Bornholm(18%) and only
four of 99 in Canmore (4%). Both proportions
are minor, but the higher rate of inheritance in
Bornholm can probably be attributed to culture
and the longer history of tourism.
By way of summarizing the data, it is clear
that inheritance was a minor concern among the
two samples, although more of a prospect in
Bornholmthan in Canmore. Most of the owners
did not have children in the business or living
with them. The fact that many respondents were
older and in second careers suggests that life-
stage is a real barrier in this industry. Specifically,
many get into the tourism and hospitality busi-
ness too late to involve their children. The small
size of many of the businesses is also a real
impediment.
Evidence from interviews
A separate but overlapping sample of 33
owners was interviewed in Bornholm. Some
respondents completed both an interview and
a questionnaire. Selected quotations from the
interviews illustrate a number of key points on
the involvement of children and barriers to
inheritance, in response to a question on
succession plans.
Three main scenarios emerged: inheritance
is not possible; it is possible but not planned or
Bornholm
(n = 1820; valid percentages)
Canmore
(n = 2627; valid percentages)
Problems 1 2 3 1 2 3
Taxes
Children do not want to live here
Children do not want to own the business
Children do not have the necessary skills
It is not able to support them financially
There is too much debt
4.00
63.2
66.7
78.9
57.9
78.9
10.0
10.5
11.1
15.8
42.1
21.1
50.0
26.3
22.2
5.3
37.0
61.5
56.0
58.3
69.2
66.7
48.1
26.9
32.0
33.3
19.2
25.9
14.8
11.5
12.0
8.3
11.5
7.4
1 = Not serious
2 = Somewhat serious
3 = Serious
Table 5.3. Problems regarding inheritance. Q: If you wanted your children to inherit your business,
would any of these factors be a problem? (multiple answers permitted).
Disposition plans
Bornholm
(n = 84)
Canmore
(n = 99)
Part ownership of the business has already been transferred/sold to
one or more children or family members
Ownership will be transferred/sold in the future to one or more children
The business will be sold, but not to children/family
Ownership is to be willed to children/family
Uncertain
2
a
8
a
22
a
5
a
50
a
0
a
0
a
31
a
4
a
62
a
a
Significant difference.
Table 5.4. Disposition plans (multiple responses).
127
desired; or it is desired and/or planned. In
addition, a summary follows of the specific
barriers mentioned by respondents. The follow-
ing quotations are translated and paraphrased
from the Danish.
Scenario A: Inheritance is not possible
My wife and I run the business seasonally.
I have to work at another job in the quiet
season to make enough money. We like living
and working here and it is a good environment
for our young daughter, but we think about
moving because it is so difficult to make a
decent living. Our daughter has no interest
in the business. I have other children from a
previous marriage but they live in Copenhagen
and abroad.
(Producer and retailer of a craft product)
The farm is too small to generate a living for
the next generation.
(Owner, farm-based accommodation)
None of my children are working in my
business. They do not want to. They have high
educations and jobs outside Bornholm. They
do not want to go back to Bornholm either.
(Hotel owner)
Our children do not live in Bornholm and have
their income elsewhere.
(Campground owner)
My father turned his fathers hobby (on the
farm) into a business. I took over the tourism
business and my brother the farm. Our own
children have moved away and are not
interested in the business. My wife and I
are definitely selling it and will retire.
(Farm-based, seasonal tourist attraction)
Scenario B: Inheritance is possible but not
desired or planned
My wife and I are from Bornholm. We built this
business from the profits of our first restaurant.
My wife runs it seasonally, and we both run
this one the rest of the year. In my family it is
a tradition to be business men, and my father
and brother are also entrepreneurs in different
firms. I wanted to create my own, not follow
in my fathers. We have no plan for our own
children to take over.
(Owners of two restaurants, one seasonal)
We are unlikely to still own the business when
our children grow up.
(Owners of an accommodation business)
Our children are not interested in this business
because of the long working hours in high
season.
(Hostel owners)
During the summer only we have children
working in the business. But they have their
own careers and will not take over from us.
(Hotel owners)
Scenario C: Inheritance is possible, and
desired or planned
Perhaps we will pass on the business to the
daughter, who has some interest and is in the
area.
(Owners, farm-based accommodation)
I have no children in the business, but my
son-in-law is my right hand and is running the
daily business. The plan is that he is going to
take over the business.
(Hotel and restaurant owner)
The children are grown up now and work
(elsewhere in Denmark). They do not want to
take over the operations of the business but
maybe the ownership on basis of stocks in the
company.
(Owner of a recreation attraction)
My son and daughter are working in the busi-
ness today. They are interested in a takeover,
when I want to retire in some years. They
know all about it, so they are fit for takeover.
(Attraction owner)
Scenario A consists of businesses that
cannot viably be inherited (no heirs, too small,
no real or separable assets, too much debt)
and those that must be sold (parents need the
proceeds). In Bornholm, many of the owners
had children who were gone and could not
realistically be considered for taking over the
business. Bornholm, like many remote and rural
areas, sees most of its children leave the island
for education and jobs, and most do not want to
come back or cannot financially make it work.
A related barrier is linked to life-stages in that
parents start or purchase the business later in
life, perhaps with retirement in mind, and the
children are already long gone. In the case of
farms, tourism businesses are usually created
for supplementary income and so are not
inheritable as separate entities.
Scenario B consists of many businesses in
which inheritance is at least possible, specifically
because of the involvement or presence of
110 Chapter 5
128
children, but it is unlikely to occur. The nature of
the business is a barrier, because of hard work,
seasonality and lowlevels of income. This results
in a negative perception of the business by
children. Many micro businesses never have
the potential to support a growing family or sub-
sequent generations as they are created in the
first place to supplement farm or other income
sources. Yet some do foresee inheritance by
children, and determining what ultimately
makes this happenshouldbe a researchpriority.
In scenario C, inheritance is desired and/or
planned. Even so, there is uncertainty about
its feasibility. One interesting case reflected the
separation of ownership and owner-operation
(children might want to assume ownership of a
profitable business, but do not want to operate
it). In such cases many of the potential benefits of
family businesses for the community are lost.
Planning for Involvement and Succession
The topic of preparing for succession is one of
the hallmarks of family-business literature, and
so there is no shortage of advice on how owners
should handle it. What is evident in much of
this advice is that attention must first be paid
to the involvement of children or other family
members in the business so that they can be
prepared for succession.
Ward (1990) and Handler (1994) described
succession as a process, rather than as an event,
and Handler conceived this process in terms of
transition theory. At each stage in the process,
the actors (typically parents and their children;
often fathers and sons) play roles that must
evolve if the succession is to take place. The
founders and potential successors must engage
in mutual role adjustment whereby founders
decrease their level of control while successors
increase their involvement to the eventual
point of taking over. In particular, there must be
a transfer of leadership experience, authority,
decision-making power and equity.
The most basic and common reasons for a
failure in the succession process relate to the
inability of founders to give up control, and the
lack of willingness or ability of children to take
over. A variety of strategies can be employed
by founders to decrease deliberately their
involvement, notably taking on newventures. In
many instances, external advisers or interven-
tion might be necessary to ensure that all parties
in the process engage in rational planning, rather
than putting off the necessary decisions. But who
is to initiate such an intervention?
According to C. Iannarelli (unpublished,
University of Pittsburgh, 1992), there are a
number of factors critical to developing the
interest of children in running the family firm:
spending time with the parents in the

business;
exposure to various aspects of the

business;
parental encouragement and positive

attitudes;
making an individual contribution to the

team; and
the time at which the opportunity to join

the firm is presented.
Iannarelli also found that young girls are
often treated differently from their brothers
during this business socialization process, result-
ing in less time being spent in the business and
lesser skill development. Parents wanting their
daughters to get involved will therefore have to
offer more encouragement to daughters, while
daughters wanting to get involved might have to
make a special effort to be taken seriously.
Ambrose (1983) and Astrachan (1993) are
among those authors who have advocated early
involvement in the firm by heirs in order to
develop their interest and their likelihood of
joining the firm.
Lansberg (1988) identifiedthe basic tasks in
succession planning as follows:
1. Formulating and sharing a viable vision for
succession.
In many tourism/hospitalitybusinesses the vision
must take into account a separation of home/
farm from the business. What exactly is to be
inherited, especially when one child is interested
and another is not? In many cases the small size
or low profitability of the business will make
inheritance a non-starter.
2. Selecting and training the successor(s) and
the top management team.
Howdo children get involved and trained if they
go away for education? At what age is it wise to
start children working in a service-oriented envi-
ronment? Can work and home be separated?
129
3. Designing a process to transfer power.
This could be done informally, between the
generations, but often will require impartial and
expert advice.
4. Developing an estate plan for asset and
ownership inheritance.
External advice will undoubtedly be needed
regarding the legal and tax implications of trans-
fer. A special consideration is that of family
brands whereby the family name has value in
itself.
5. Designing structures to manage the changes,
such as a family council, task force or board of
directors.
The majority of tourism and hospitality firms
will be too small to permit or require elaborate
mechanisms or boards of directors, but it is
possible that those most suitable for inheritance
will be large enough to warrant these methods.
6. Educating the family regarding the rights
and responsibilities that come with new roles in
the business.
Founders have the obligation to inform and
consult with children about all family and busi-
ness matters, and especially about succession
options. As discussedelsewhere, one major issue
facing families is the trade-off between reinvest-
ment in the business and taking out funds for
immediate use. Regarding inheritance, there is
sometimes a fear in the minds of parents that
their inheritors will pillage or sell the business to
realize a quick income boost.
Additional relevant advice comes from
Ward (1990) who recommended 15 key
guidelines to help with the transition process:
Present a balanced perspective on business

to children.
Present the business as an option, not an

obligation.
Successors should get outside experience.
Successors should be hired into an existing

job in the family business.
Encourage the development of comple-

mentary skills in the successor.
Teach successors the foundations of the

business.
Start the successor with mentors.
Designate an area of responsibility for the

successor.
Develop a rationale why all the effort is

worth it.
Recognize that you (the owners and heirs)

are not alone.
Have family meetings.
Have a business plan, estate plan and

succession plan all together.
Establish an advisory board.
Set a retirement date.
Let go!
Handler (1994) identified a number of
research needs concerning the succession pro-
cess, including study of cultural or ethnic differ-
ences, the role of family dynamics and gender,
and resistance factors to succession effective-
ness. To this list must be added the industry and
setting-specific factors discussed previously, as it
is clear that tourism and hospitality enterprises
present some special challenges.
Estate planning
All family businesses must consider the ultimate
disposition of their assets, and when inheritance
is contemplated, estate planning is required. A
workable form of ownership has to be created
for the heir(s), with options ranging from one
heir as total owner to distribution of shares
among many family members. It might even
be desirable to transfer voting and non-voting
stock or to create a family trust. Gifting of assets
over a period of time, well in advance of the
legal change on ownership, might save taxes.
One of the most serious issues facing
founders and all subsequent owners is creation
of their personal retirement fund, separate from
transferred assets. For example, how much are
the parents going to need to live independently
through retirement, and will there be enough
earnings potential left in the business to support
the next generation? Many businesses in tourism
and hospitality do not have the potential to
support two generations at once, leaving the
owners with no option but to sell the firmas their
retirement fund.
A framework for investigating
industry-specific barriers to inheritance
A number of generic and industry-specific
barriers to inheritance have been identified, but
112 Chapter 5
130
research on other industries, settings and
business types is bound to reveal more.
How are they to be explored and evaluated?
A framework is provided in Table 5.5.
The model developed by Shapero and
Sokol (1982) for examining entrepreneurial
events (i.e. firm creation) is useful here. Those
authors hypothesized that both negative dis-
placements (such as forced migration or job loss)
and pull factors led to newfirmcreation, but per-
ceptions of desirability andfeasibility intervened.
This type of thought process is also likely to be
crucial for the inheritance/succession process:
the situation of the potential heir must be consid-
ered (such as age, gender, work experience),
then perceptions of desirability (is it an attractive
career option?) and perhaps simultaneously
viability and perceptions of feasibility (can the
family business support me?).
A number of research needs are suggested
by the research findings and the framework. One
line of research would be to examine the experi-
ences, attitudes and plans of tourism and hospi-
tality students towards that industry and family
businesses in particular. Studying how children
are brought up in service-oriented businesses,
especially where home and work are combined,
would be very revealing. Selecting a sample
of multi-generational businesses will enable
analysis of barriers and success factors. Why do
some hotel businesses in Europe, for example,
survive many generations in the same family?
Is it due to culture, succession planning, or
a favourable business environment? Different
settings should be compared.
Tourism and hospitality businesses in
remote islands and small towns might differ
considerably from those in large cities or resorts.
It is possible that children are more likely to enter
a family business if it is located in a resort or city.
In more general terms, different industries and
business types should be compared. Use of the
suggested framework will permit systematic data
collection on key points affecting succession and
inheritance.
Chapter Summary
The life cycle model provided the framework for
assessing challenges associated with balancing
family and business. A number of these chal-
lenges are generic, and several industry-specific
ones were presented especially seasonality
of demand and combining home-life with
guests. Specific issues facing the sole proprietor,
copreneurs, young business families and older
business families that involve children were
then examined.
Strategies for managing or balancing family
and business were detailed, including very
specific advice on how to separate guests from
private spaces and private times, and formal
mechanisms such as establishing family agree-
ments, family councils and codes of conduct.
The special case of gender issues has been dis-
cussed in detail, along with the family and the
environment. Research evidence fromAustralia,
Denmark andCanada was presentedtoillustrate
many of the challenges andstrategies for coping.
We then turned to the challenges of
involving the next generation, and ultimately
succession of the business. In this context the
idea of a family legacy was addressed. A num-
ber of generic and industry-specific barriers to
inheritance were presented, ranging from the
obvious (no heirs; the business cannot support
inheritance) to life-stage factors, such as couples
Situation of potential heir(s) Perceptions of desirability Perceptions of feasibility
Being brought up in the

family business
Work experience (within

and outside the family firm)
Education specific to the

industry
Ability to work in and/or

control the business
Education and career goals
Desirability of the
potential lifestyle
Desirability of the
location/setting
Desirability of the
nature of the work
Desirability of the
business as a career
Current and potential

earnings from the business
The legacy (real property; family brand)
Potential to grow or diversify the

business
The business environment

(competition, long-term viability)
Practicality of inheritance (taxes, legal

problems)
Table 5.5. A framework for examining industry-specific barriers to inheritance.
131
establishing businesses when children have
already moved away for their own careers and
families. Founders might be reluctant to let go of
their business, but equally the children might
simply not share the dream of autonomy and
lifestyle through operating a family business.
Research findings confirmed a low rate of
succession planning and potential inheritance
of the businesses examined in Australia, Canada
and Denmark. Specifically drawing on the
Bornholm, Denmark, sample, several scenarios
were developed: inheritance is not possible; it is
possible but not desired or planned; it is possible
and desired or planned. The latter scenario is
observed infrequently.
After discussing how owners can plan
for involvement of their children and eventual
succession, this chapter concludes by presenting
a conceptual framework for investigating
industry-specific barriers to inheritance. The
three main factors to consider are: situation of
the potential heir(s); perceptions of desirability
of inheriting or taking over the business, and
perceptions of the feasibility of inheriting or
taking over the business.
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6
Farm-based Family Businesses
Introduction
This chapter introduces three case studies of
farm-based family businesses in Canada and
Australia. Alborak Stables Inc. is a family-first
business with lifestyle motivations, located in
the foothills of the Rocky Mountains of Alberta,
Canada. Taunton Farm in the south-west of
Western Australia is also a business that builds
on family farmlands, with the aim of keeping
ownership of the land as paramount. The final
case of Old MacDonalds is a campground on a
family farm in Alberta, which was also started as
a complement to rural living. In all three cases,
family farming is the common ground and the
decision to start a family business in tourism
was a pragmatic response to the needs of the
farm and the family.
Case 6.1 Alborak Stables
Background
Alborak Stables Inc. is a family-owned and
-operated business located 35 km west of the
Calgary, Canada city limits, in the foothills
of the Rocky Mountains. The Donnelly family
established this business to be devoted to the
Olympic disciplines, or English horse riding
(i.e. dressage, show jumping and eventing),
and they offer training, lessons, clinics, horse
stabling and management, and commission sale
horses. The main facility, completed in 1998, is
a 2222 square-yard (1856 m
2
) indoor heated
arena with 38 boarding stalls; two tack rooms,
washrooms and shower, offices, riders lounge,
and bedrooms and kitchen for staff (on a sec-
ond level). The Stables also offers an outdoor
sand ring, round pen, paddocks, pastures and
trails over the 800-acre farm. As discussed later,
farm and Stables are legally separate entities.
Alborak is situated in a fairly isolated
location along an unpaved private road leading
to the main Trans-Canada Highway. Its regular
clients are attracted from the city, surrounding
rural areas, and Banff and Canmore to the west.
The operation can be described as a rural and
agricultural land use, but from the customers
perspective it is primarily recreational, entailing a
high degree of direct customer service. There
is potential for tourism development, but it
remains uncertain if the Donnelly family will
move in that direction.
The farmconsists largely of forest with some
improved pasture. The traditional agricultural
business of cattle grazing and horse breeding
remains part of the familys economic activity.
Currently they run 50 cowcalf pairs, but
the land does not have additional agricultural
potential.
Sandra and Mary work full-time at the sta-
bles, with Sandra being in charge of the horse-
related operations and Mary handling most of
the office responsibilities. She recently received
permission to run a B&B establishment, which
would be restricted to two bedrooms in the
family house. The demand comes from clients
who would like occasionally to stay overnight.
135
John works from the family home as a private
consultant, and provides financial advice to
the Stables. Karens involvement has also been
part-time andrelatedtomarketing the business.
In addition to family, the stables have
two full-time employees, one full-time working
student, and two to four part-time working
students, depending on the season.
Family dimensions
The Donnelly family consists of John and Mary,
who own the land and facilities, daughter
Sandra who is President of Alborak Stables Inc.
(and leases the facility from her parents), and
younger daughter Karen who lives and works in
Calgary. The family has agricultural roots in
Alberta dating back to 1886, and the farmland
has been in the extended family since the
1940s. Mary Donnelly inherited it. The private
access road, owned by a natural gas company,
was built only in the 1970s, and the current
family house was built in 1981.
Horses have always been an interest
to family members and a focus of family
activities. Their love of horses logically led
to the establishment of the Stables, but more
specifically it occurred because of Sandras
ambition to run her own operation and her
parents desire to see that happen.
The decision to proceed was made inter-
nally and by consensus. They are obviously a
hands-on family that has both set and imple-
mented an ambitious vision. Having made the
decision to develop the stables, the Donnellys
obtained legal advice, especially regarding
equine law, and prepared a business plan.
Detailed cost estimates were received and
projected along with pro-forma financial
statements. A full feasibility study including
marketing evaluation was not completed, and
the family realized there were risks associated
with the venture.
They did understand the competition,
however, which consists of 1215 other English-
style stables in the region. This led them to
decide to build a top-quality facility in order to
stand out immediately. Three target markets
were clearly identified, related to services
offered: horse breeding, training and sales; horse
and rider coaching for both recreation and sport,
and horse management. It was not conceived as
a tourism-related business, but the possibility of
adding tourismattractions and services has been
recognized all along.
Start-up financing involved bank loans
with the farmland as collateral, and the selling
of some acres of logs for cash. For a variety of
reasons, including financial risk, Alborak Stables
was created as a separate, incorporated business
that leases the land and facility from John
and Mary Donnelly. If the worst-case scenario
occurred in terms of the stables, land could be
sold to pay off debt.
However, for the parents the land, and now
the stables, is a family legacy that will some day
be inherited by their daughters. With this goal
in mind, why not develop the business there?
Mary initiatedthe idea, knowing that Sandra was
looking to lease a stable to begin a business on
her own.
Sandra had been doing teaching and
horse training in different locations, and she
had definite ideas about design and operations.
Living on the farm and near to her parents is a
nice bonus, but her main motivation was to start
up a successful business and live on a farm.
John did not see a big role for himself in
running the business, although he anticipated it
would involve some of his time as business
adviser and general handyman.
Karen was more oriented toward com-
pleting her graduate degree in planning and
commencing a professional career in the city,
where she lives. She enjoys working with family
and helping in the business on a part-time basis,
but was not motivated to develop or run the
business.
The decision to develop the stables was
made by the parents, who had to provide the
land and secure financing, in consultation with
the two daughters. Sandra, naturally, was party
to the detailed planning process. Karen was
interested and supportive, but was not intending
to be part of the business full-time. Everyone
agreed it would be fun, and they all looked
forward to some degree of participation.
Having made a family decision, the Don-
nellys had to develop their individual roles
in the business and work out a number of
family-business inter-relationships. At one level,
everyone helps with everything, in order to get
118 Chapter 6
136
things done. However, there are some clear
separations of duties and responsibilities, and a
belief that everyone needs something significant
to do.
Sandra, as President, has overall responsi-
bility for stable operations. She has a full-time
employee whoacts more like a partner in day-to-
day operations. Sandra also shares accommo-
dation with staff on the upper level of the stable,
so staff must fit into the family atmosphere. She
often works long hours, including evenings and
weekends, so that work and personal life tend to
merge. She takes Mondays off and gets 2 or 3
weeks of holiday each year.
John and Mary currently handle most of the
business operations. Mary feels she will stay
involved for some time in the same capacity,
doing general office work like invoicing, and
even tractor operations. John provides financial
advice, and Karen has contributed to promo-
tions and plans to construct a website. Karen
might consider more involvement in the man-
agement of the business in the future, but views
the horse-related activities more as leisure than
ideal work.
Business dimensions
The Stables are running at near physical
capacity already, although there is considerable
scope for revenue enhancement. First-year
targets were exceeded, but generating a
surplus is a multi-year effort.
There seems to be a family consensus
regarding the short-term in not making the
business much bigger than at present, but to
make it profitable. A number of years have
gone by in which costs have exceeded revenues.
Sandra has not been able to take a pay cheque
out of the business, but does earn some personal
commissions stemming fromhorse breeding and
consulting to horse owners. Profitability is linked
to developing a good reputation and developing
a loyal client base. Raising young horses for sale
should become profitable.
A paid stable manager might be feasible
in the future, thereby leaving family members
freer to enjoy the horse- and customer-related
activities. Sandra might also consider taking on a
formal business partner.
John would like a slower lifestyle and less
need for financing the company. Ultimately it
should repay the initial investment and operate
self-sufficiently. More horse sales and training
fees, and not physical expansion, would
generate the desired profits.
Possible developments have been articu-
lated, and relate to both the Stables and the
property in general. The stables could benefit
from a cross-country course, more sheds,
pastures and shelters, and perhaps a retail
shop. Other possibilities include a country inn or
retreat, restaurant, and more diverse recreation
activities. More development would require
municipal planning permission and would
probably not be feasible as long as the access
roadis private. Developing the roadtomunicipal
standards seems prohibitively expensive, and
might encounter opposition fromarea residents.
Already the Alborak sign at the entrance to the
private road has gone missing.
Decision-making involves the whole family,
which can be a unifying force, although within a
family opinions are likely to be expressed frankly
and with emotion. Formal Alborak Stables meet-
ings are scheduled, at which goals are set and
measured.
Keeping family relationships good is an
important concern for all family members.
Family life has merged with business life,
according to one member of the Donnelly
family, but inmany ways the effort has drawnthe
family much closer together. There is a clear
sharing of goals and considerable pride in
the familys accomplishments with the business.
Most family interaction now takes place either
at the workplace or in discussions about the
workplace. Other get-togethers became rare.
Recruiting and keeping a good workforce is
an issue, especially to internalize the goals and
aspirations of the family. As well, there is con-
stant pressure fromclients, many of whomlike to
socialize with the family. For the most part this is
an enjoyable aspect of the hospitality business,
but finding privacy can be a challenge. Also,
social demands of patrons at times make it diffi-
cult for family andstaff tocomplete their chores.
An attachment to the land is a driving force
in this family business. The stables provide
added value that could not otherwise be
attained, given the low agricultural potential of
the farm. Keeping the land and business within
Farm-based Family Businesses 119
137
the family, and through the next generation, is
an important value base.
This type of business is not particularly
seasonal in that the horses have to be boarded
all year round, as do training and lessons.
Remoteness has its advantages and disadvan-
tages. A horse-based business could not work
well with lots of neighbours, and a large acreage
is necessary for grazing. Customers are prepared
todrive a reasonably long distance for the special
services offered, and there is little direct com-
petition in this area west of Calgary. Being in
the forested foothills allows unique trail-riding
opportunities. It is a customer-service business,
so that good relations with clients are essential.
It is a 7-days-a-week business, so someone
with responsibility always has to be on site. It is a
long way to get supplies and services, so some
costs are higher. The initial investment was
probably higher to compensate for extra driving
time on the part of clients it had to be of high
value right from the beginning.
Neighbours, although fewand far between,
can be problematic when setting up a business
that attracts new traffic into a quiet, rural area.
Signage for the stables, posted at the main road,
has disappeared, although clients are provided
with maps to help find the stables.
Ownership dimensions
As evidenced by this case, compared to public
companies private businesses can more easily
do long-term planning without the pressure
of generating short-term profits for the sake
of shareholders. Furthermore, planned inheri-
tance of the business by children ensures
continuity.
Ultimate disposition of the farm and the
stables has not been formally planned. It is
assumed that the two daughters will share the
farm and land inheritance, and the family all
agree that this is important. Given that the land
is separate from the stables in terms of owner-
ship, a number of options exist. Coming to an
agreement on this sensitive issue is difficult in
most families, and the Donnellys do not view it
as a current priority.
The Donnelly family identified several
critical success factors for this business:
Commitment by the entire family.
A strong knowledge base in the (horse)

industry.
Relatively strong business knowledge.
Strong financial resources (within the

family).
Top quality facilities.
Access and closeness to population

centres.
Case 6.2 Taunton Farm Holiday Park
Background
Taunton Farm is a caravan and cabin park on
the Bussell highway, near the town of Cowara-
mup in the south-west corner of Western Aus-
tralia. It offers powered and unpowered sites,
caravan and limited cabin accommodation and
is located on a working farm in the heart of the
Margaret River district. It has excellent facilities
for guests, including a rustic shed and barbecue
facility complete with ovens, refrigerators and
modern conveniences. The park is run with
great enthusiasm by the farmer Rob Saunders
and his wife Julie, although they do employ a
couple to manage the park reception area.
Family dimensions
Rob Saunders personal reasons for establishing
Taunton Farm Holiday Park were based on sur-
vival of the family farm, which he inherited from
his parents. As farming sheep and cattle had
become less and less viable due to increasing
competition and lower prices for primary pro-
duce, alternative sources of income were needed
to service loans and cover the running costs of
the farm. Rob has a strong desire to continue to
work in agriculture and clearly has a strong
affinity with the land. Robs wife Julie shares the
same goals as Rob, with a strong desire to raise
their family (ages 20, 18 and 13) on the farm.
Interestingly, growthof the business was not
an initial goal as Rob decided to take a cautious
approach to business development and play it
by ear. Robs family would continue to live off
the farm in terms of their food, accommodation
and transport requirements. Any profit from
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138
the Holiday Park would be re-invested into
improving the park and adding value through
provision of additional facilities (to be discussed
later). Thus expansion was never a goal for the
business, but improvement of existing facilities
was always pursued.
In 1991, when Rob was considering
whether tobuilda holiday park onthe roadfront-
age of his 330 hectares (825 acres) estate he con-
sulted widely with tourismand farming people in
the south-west region of Western Australia. Local
and regional government departments were con-
tacted to provide information on the feasibility of
caravan parks. However, only one proved to be
beneficial, the South West Regional Office of the
Western Australian Tourism Commission. They
provided a computer model which could be used
to predict the optimal number of caravan berths
to build (which was 60) and the cost and revenue
flows associated with that scenario.
Rob found that business advisers and how
to feasibility seminars were mostly a waste of
time and involved individuals who were seeking
to sell their services and products rather than
deal with specific business issues.
A critical decision faced by Rob was
whether to build chalet-style accommodation
and target wealthy tourists or to provide a
value-for-money holiday park for travellers on
a budget. He discussed this problem in detail
with his neighbours, who were keen caravan-
ners, and they agreed that a caravan park
would be attractive to the many holidaymakers
travelling through the region.
Based on his discussions with as many
people as possible, combined with his own
gut feeling, Rob decided to build the caravan
park. In hindsight this was the correct decision,
as there has been an explosion in chalet-style
accommodation in the south-west region and
approximately 300 new establishments opened
in the 1990s. However, Taunton Farm Holiday
Park remains one of the few caravan parks in
the region which targets the lower-income end
of the market. Rob believes it is better to be
different than it is to be better. In other words,
he has resisted participating in the rush to build
up-market accommodation and has chosen to
be unique.
The decision as to whether the children will
take over the business will be made in consulta-
tion with the whole family. The children will only
take over the business if they so desire. So far,
the eldest child (a 20-year-old boy studying
architecture at university) has not shown any
interest in taking over either the business or the
farm. It is possible that the next eldest child (an
18-year-old girl) may be interested, in the future.
The youngest child (a 13-year-old girl) shows
some interest in farming. Thus there is no clear
disposition plan, but the business disposition
will be determined according to the needs and
aspirations of each family member. Rob is ada-
mant that he will not sell the farmor the business,
but would consider a lease arrangement, as long
as the lessees were suitable. Rob considers that
any lease arrangement would have to be
regulated to avoid any problems developing
between the owners and the lessees. A third
option is the appointment of full-time managers
and the reversion of Rob and Julies role to
owners, with no involvement in the day-to-day
running of the business. Whatever the disposi-
tion plans are, Rob is keen to leave an inheri-
tance for his children in the formof the farmland
and the business.
Business dimensions
Rob chose to participate in a franchise arrange-
ment with Big 4 Holiday Parks, the largest chain
of caravan parks in Australia. Big 4 is an affilia-
tion of some 160 parks in Australia, offering
units, cabins, villas, caravan and camping
sites to suit a range of tastes and budgets
(http://www.big4.com. au/). Big 4 charges a
franchise fee based on a percentage of turn-
over, which for Taunton amounts to Aus$2000
to Aus$3000 per annum. Holidaymakers are
invited to join the Big 4 Club for Aus$30 for
24 months membership and qualify for a 10%
discount on tariffs in Australian Big 4 parks as
well as in affiliated parks in the UK (The Best of
British), New Zealand (Top 10 Holiday Parks)
and Italy (Network Camping). Based on the
discount rate revenue that Taunton receives,
Rob estimates that this franchise generates
approximately Aus$20,000 worth of business
per annum so revenue from the franchise
arrangements is far in excess of the costs.
There are also consumer loyalty benefits
associated with the Big 4 franchise, as franchise
139
parks refer their visitors to other Big 4 parks
around Australia, thereby keeping people
within the chain. Big 4 offers a free reservation
and book-ahead service which guarantees
accommodation at the next Big 4 park, as long
as the booking is made as you leave a Big 4
park and pay a deposit. Big 4 also provides
a money-back guarantee if guests are not
satisfied with the facilities or service. All
franchisee parks have to apply to Big 4 and are
inspected a number of times before they can
affiliate with Big 4.
Being part of a larger chain initially
helped Taunton to counter competition from
other parks. A Western Australian company,
Fleetwood Corporation, has been expanding
into ownership of caravan parks in order to
obtain sites for the setting up of their park homes
(mobile homes placed on longer-stay and per-
manent sites). Fleetwood Corporation is a major
promoter of caravanning and camping in WA
and operated over 1600 caravan sites in eight
holiday parks in 1999. They are one of the
largest wholesalers and retailers of caravans
and caravan accessories in WA, and the largest
manufacturer and supplier of park homes to
the WA market. However, Fleetwood recently
affiliated with Big 4 and no longer poses a direct
threat to his clientle.
Rob continues to nurture customer loyalty
through personal contacts (by telephone) and an
annual Christmas card mail-out. As many as
50% of his local clientle (from within WA) are
repeat visitors, and word-of-mouth, although
slow to take effect, remains his most effective
communication channel. Rob estimates that it
took about four years for the reputation of
TauntonFarmtospread, but this latter channel is
now very effective not only within WA but also
across Australia. This may reflect the nature of
the camping and caravanning holiday market,
where the parks visitors spread its reputation as
they travel to other parks of Australia and talk
with other caravanners and campers.
Rob considers that there are some unique
aspects of their Park and farming activities.
Principally, the unique mix of having a working
farm and a holiday park on one site creates
opportunities for specialized tours such as horse
riding, dairy and shearing operations and farm-
yard animal viewing. However, Rob is reluctant
to expand into these areas without the specialist
knowledge and infrastructure needed. In any
case, other farm operators in the region are
providing these services.
Another unique aspect and an underlying
business philosophy is the emphasis on personal
contact with customers and staff. Rob and Julie
are always prepared to talk and socialize with
their visitors, and encourage their staff to be
friendly towards visitors at all times. Personal
contact takes precedence over any operational
matters. For example, Rob does not mind if it
takes one and a half hours to empty the rubbish
bins if he is engaged in conversation with visi-
tors. This creates an issue of howto complete the
daily tasks of running the park without being
caught up in conversations all day. Rob jokingly
suggested he needs lessons in how to get away
from people.
Coupled with the emphasis on personal
contact is the high level of pride in Rob
and Julies achievements at Taunton Farm.
Their success as an affordable, friendly and
comfortable holiday park was recognized in
the 1997, 1999 and 2000 Western Australian
Tourism Awards when they won in the category
of Camping and Caravan Parks. In 2001,
Taunton Farm was the first caravan park
in Western Australia to be inducted into
the Tourism Hall of Fame after winning their
category three times.
Rob has many development plans, but the
cautious approach to expansion is still prevalent.
Any future development will be based on the
financial aspects of the business turnover and
occupancy rates. As a general rule, Rob believes
that once an average 60% occupancy rate has
been reached it is time to expand, or run the risk
of turning away business. This principle applies
specifically to the cottages within the park, which
generate the most revenue for the business. Rob
commenced with two cottages (cabins) in 1992,
but has since increased to ten. Next year more
cottages will be built on land overlooking the
park and the pond/recreation area. Interestingly,
the cottages cover their costs at just 20% occu-
pancy rate and make a profit at 40% occupancy
rate.
Other plans for the park include a swim-
ming pool and more caravan berths with their
own en suite bathrooms attached. Rob is also
considering extending the park office to include
a tearoom or licensed restaurant, which will
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140
overlook the pond and pool area. Another plan
involves production of bottled rainwater, which
will be produced and sold in the park. While
these plans involve expansion and diversifica-
tion of the business, Rob views these develop-
ments as adding value to the park, rather than
deliberate growth.
For Robs family the decision to borrow money
to invest in the park was relatively low risk. Rob
was well aware that the improved value of the
land after building the park would be far in
excess of his borrowings, which were approxi-
mately Aus$300,000 in 1992. In other words, if
the park was not viable, Rob could recoup all of
his investment (and probably make a profit) by
selling the park as an established business. The
value of the land was higher than the capital
cost of the holiday park and land values in the
region have continued to escalate during the
1990s. However, there is always some risk, and
for Rob it was the threat of losing the land,
which he viewed as a part of his heritage, which
should be passed on to his children in the same
way that his parents bequeathed him the farm.
Rob would always be reluctant to sell any of his
land, as he believes that once it is gone it is
gone. Again, his links with the land provide the
main underlying philosophy of the family and
the business. The park land remains a part of
the farm holding and the mortgage is secured
over the farm.
Rob will continue as owner/manager
with his wife Julie well into the future. They
are both young (around 40 years of age) and
will continue to be involved as owners. How-
ever, they have reached a point where they
must now appoint a paid manager of the park
as Rob is keen to devote more time to farming.
He has decided that the business justifies a full-
time paid manager, a considerable departure
from the casual arrangements he has had in
place. He currently employs a young couple
as paid managers for five days per week and
only works at the park during their days off or
when it gets busy. All decisions regarding the
management of the park are still made by Rob
and Julie.
Case 6.3 Ol MacDonalds
Background
Ol MacDonalds Resort is located on Buffalo
Lake, Alberta, about a 2-hour drive from either
Edmonton or Calgary. It is very rural, not on a
main highway, and therefore can be considered
to be a destination resort based on the attrac-
tion of the large lake and peaceful environment.
The owners can boast of a full house in sum-
mer, and that 80% of their customers are repeat
visitors or referrals from customers.
The resort started as a 25-site campground
on forested family land and has been
ambitiously developed by the MacDonalds to
become a family holiday destination. The resort
offers many attractions and services:
270 serviced and unserviced pitches for

recreational vehicles and tents;
group camping areas;
cabins;
motel;
rental recreation vehicles;
washroom and laundry buildings;
cafe (home cooking) and store, combined

with the office;
gift shop combined with indoor mini-golf

and museum, pool tables and arcade;
large tents for group use;
catering on- and off-site;
sandy beach, boat rentals and boat launch;

beach concession;
playgrounds and ball diamond, horseshoe

pits, volleyball net, obstacle course, crafts
for kids;
farm animals;
fire pits and firewood;
hay-wagon rides and horse riding;
special events; and
church services.
The general area offers a golf course,
hunting and fishing, bird watching, and
abundant wildlife.
The most recent development was the
purchase of a large nearby house that is rented
to groups for functions or as deluxe, all-year
accommodation. The family also possesses
janitorial and maintenance contracts for three
nearby provincial parks. They have also sold
residential lots nearby, where a small subdivision
141
has been developed. The actual resort site is
50 acres in size.
The resort business is highly seasonal in
Alberta, with winters being unsuitable for camp-
ing and lakeside recreation. The MacDonalds
have no ambition to run any of the resort during
the off-season (from October to April) but hope
to develop off-site catering and the newhouse as
all-year revenue sources.
Family dimensions
Jean MacDonald came up with the idea of
developing a campsite, partly as a reflection
of her own mothers unfulfilled dream to start
a business. She admits this was largely an
emotional motive, and also believed that farm
income was not enough, and wanted to make
her childrens lives better. She could develop a
legacy that could be handed down to them in
the future, all within the context of remaining a
farm family with strong ties to the land.
With her earlier experience working as
secretarytreasurer of a county recreation
board, and financial experience in running a
park, Jean felt she couldrun a campsite business.
There was also the need for a challenge, and she
was motivated even more by being told her idea
would not work. Banks would not lend money
for a rural tourism business, especially when
provincial parks on the same lake provided free
camping. Why would anyone pay?
Daughter, Joanne MacDonald shared their
mothers original goals, but some of the others
did not. There was no real opposition, however,
and Sam was simply too busy to contribute.
The decisive factor in getting started was the
availability of a federal grant programme. Jean
applied and received money in 1984, which
made it possible to hire workers and clear bush
land for roads and 270 camping pitches. If the
grant had not been available Jean feels she
would have eventually got it done, but the site
would have been much smaller, and it would
have been completed at a much slower pace.
Jean describes the family as conservative,
thrifty, and always saving. Hence they retained
her grandparents possessions, which now con-
stitute the on-site museum. The ideal of leaving a
physical legacy of value for future generations
runs deep in the MacDonald family.
Sam was originally reluctant to set up a
resort business, as he was farming 2000 acres
(800 hectares) and had little time to spare. For
the first 2 years he had no direct involvement in
the resort operations, but supported the idea of
its development because it looked like it would
work. He subsidized the resorts development
from the farm income, and although the farm
operations have been greatly diminished he
still does some outside consulting work for
additional income. Now they own 1400 acres
and continue to raise 120 cattle. The resort now
commands all his efforts during the peak season.
Sam admits he is a farmer at heart and could
never live in the city.
The resources, consisting of ample forested
land, and attractive waterfront with beach,
were part of the original farm and presented a
natural opportunity for some kindof recreational
and/or residential development. There was no
specific plan for ultimate development of the
land, and the concept evolved over time. Sam
never believed it would get to its current size and
complexity, and it grew very fast.
Joanne was excitedabout her parents deci-
sion to develop the resort, and had confidence in
its success. She was involved fromthe beginning
on a part-time basis, and set up the registration
process. Recently she quit her full-time job at a
high school in a nearby town to commence
full-time at the resort. The other daughter,
Roxanne was living and working in Red Deer
when the start-up decision was made. She was
not involved in the initiation of the resort, but
saw the potential for extra income. She visited
frequently and helped out a little, then moved
back to Buffalo Lake in 1994 with her two
children. It was her goal to raise children in the
country, and she built a house on the nearby
subdivision being sold off the family farmland. In
1995 she started to work three-quarters of her
time at the resort. She did not know how much
the business really entailed and never seems to
get finished with work and responsibility.
The land and resort business is owned
by Sam and Jean MacDonald as a limited com-
pany. Two daughters are employed, and three
of their children have worked in the business
seasonally, so it is supporting three generations.
Previously, their son Murray, along with Joanne,
was being groomed to take over management of
the resort, but in 1998 he and two staff members
124 Chapter 6
142
were killed in a car accident. This tragic incident
delayed the retirement plans of Sam and Jean,
and required a major re-assessment of where
the business was heading and who would run it.
A 2-year period ensued that has been described
as a plateau, and a time of healing and
introspection.
Business dimensions
Sam has to be jack-of-all-trades around the
farm and the resort, all year round. He is
the only one familiar enough with the resort
infrastructure (e.g. where do the water lines
run?) to handle much of the maintenance. The
workload is high and can be very demanding,
especially because the familys strategy has
been to improve the resort continuously, with
frequent expansions made to the physical plant.
Jean functions as office manager. She
handles the financial and marketing side of the
business, but also works in the cafe and catering
areas.
Joanne is the reservations manager and
deals with 90% of their customers through the
front office. She has done some staff manage-
ment and payroll work, but registration is really a
full-time job. Dealing withpeople canbe difficult,
but it is the part she enjoys most. Eventually
she would like to take over more of the general
management and relieve her mother of her
workload. Her eldest daughter is 16 and has
been working on site; she would like to study
tourism and enter the family business full-time.
Roxanne runs the gift shop, museum,
arcade, mini-golf and petting animals. The
indoor facilities are all in one building and
constitute a vital profit centre for the resort.
Three grandchildren (two daughters and
one son of Joanne and Roxanne) work
seasonally at the resort; one has been employed
full-time and the other part-time over the
summer. They work in the store and reception
areas. Kevin, another son of Sam and Jean, has
not been involved in the resort.
This case illustrates howthe family business
keeps a family together, especially through
adversity. Family members agree that ability to
work through problems together is a must, and
the crisis followingMurrays deathreinforcedthis
conviction. Not all differences of opinion have
been easy to resolve, but in a family context
there is the knowledge that they must and will be
resolved eventually. Emotion is a key element in
this family business, and it has its positive side
in generating commitment. Working with loved
and respected family members makes for a good
environment and the familys accomplishments
foster pride.
Even disagreements can be lived with, but
at least one family member would like to see
more formal and effective organization, with
regular meetings and better communications.
For example, sometimes staff receive different
instructions fromvarious family members, so the
question of who is in charge needs sorting out.
To the parents, this family business provided
the opportunity to work with family and to see
children grow in age and ability. It provides
personal happiness to have children at home or
nearby. Long hours and hard work are inherent
in the family business. The ownerparents are
never free of responsibility and getting a day off
is always difficult. Children have to decide if
that is the lifestyle they want.
Chapter Summary
One common characteristic for all farm-based
family businesses is strong ties to the land.
These are not only based on farming traditions
or love of the land, but also financial ties that
compel farming families continually to work the
land to make it viable and support the family.
This situation had driven the families into
diversification into tourism perhaps as reluctant
entrepreneurs. This is a very difficult transition
to make from an industrial perspective from
being a primary producer to being a service
sector operator. From a business perspective
farming and tourism are complete opposites
farming is supply-driven, tourism is market-led;
farmers are cost-cutters, tourism businesses are
revenue-maximizers; farmers produce single
standardized products at a given price, tourism
businesses diversify into many products and
143
offer a range of prices. Perhaps the only thing
that farming and tourism have in common
is seasonality, although tourism operators
can adopt strategies to cope with seasonality.
These three cases illustrate how farm-based
family businesses have negotiated the difficult
transition from farming to tourism based on
careful decision-making, family commitment
and most importantly, appropriate use of the
farm land.
126 Chapter 6
144
7
Family-owned and -operated Small Hotels
Introduction
Running a small hotel places families at the
centre of the tourism experience and as such,
places extra demands on both family members
and the business. Working hours are long and
guests demanding, and the rewards can be
insufficient for family members working in the
business. The three cases in this chapter dem-
onstrate that family-owned hotels represent
the quintessential family businesses in tourism
and hospitality, in that the true character and
strength of the family is reflected in the fortunes
of the business. Case 7.1 demonstrates that
hard work and commitment are needed to
maintain a family business that provides accom-
modation, and owners must in some cases be
willing to work in all aspects of the business,
including construction, maintenance and clean-
ing, for a limited financial return. The lifestyle
rewards identified earlier in the book are clearly
sufficient to offset any lack of remuneration for
the founders of the business, but the next gener-
ation are not always willing to make such a
trade-off. Case 7.2 also demonstrates that hard
work and imagination can transform a heritage
building into a hotel and restaurant and prove
to be a financial success. However, even when
opportunities are realized by family businesses,
rewards are not always distributed equitably,
generating some level of resentment amongst
family members. Case 7.3 illustrates a young
family business, yet to face some of the
challenges of balancing family and business
dimensions, and one in which ownership and
succession is not yet an issue.
Case 7.1 Gunnar and Maude Bergstedt,
re, Sweden
Background
Located in the mountains of central Sweden,
the resort town of re is primarily devoted to
the winter sports of downhill and cross-country
skiing. In the surrounding rural area are several
smaller ski facilities and a range of accommoda-
tion, including the self-catering cabins owned
by the Bergstedt family.
Gunnar and Maude Bergstedt operate five
cabins containing ten units, and three of the
cabins are considered to be at the executive level
of quality for the purpose of advertising to the
German market. They are all situated in a
wooded subdivision of 2025 lots that lies
adjacent to a small resort operated by friends
of the Bergstedts (it is also a family business)
that contains a restaurant. Nearby is a ski hill
and hotel complex, and the area contains many
groomed cross-country ski trails. Gunnar helps
his neighbours maintain and groom the ski trails
through the winter season, as they are the main
attraction.
145
Family dimensions
Gunnars grandfathers grandfather established
the family farm, and when the railway came to
re in 1882 he recognized the potential for
tourism development. He built a shop and a
hotel, which have not continued in the family,
but this initiative certainly imbued a family
interest in tourism. What has been passed on
through the generations is the farm, and the
separate landholding on the mountain.
In 1963 Gunnars own father started the
subdivision that today contains the cabins, some
2025 in total. Gunnar is not alone in this line
of business, as both his brothers have also
developedcabins andhomes onthe family land.
When Gunnar was about 20 years old he
had a vision of this development. He expected
that building and renting ten cabins would make
him financially comfortable, and that he could
be his own boss with flexible time. Of course it
proved rather more difficult! He entered a career
as a schoolteacher and is now retired after
almost 30 years in that profession. Maude also
worked locally, and both incomes were needed
to support the family and development of the
cabins.
Over the decades he and his brothers built
their separately owned cabins one at a time,
using wood from their own forest, cut at their
own small sawmill. The two brothers and
their families live on the mountain in houses
they built, while Gunnar and Maude live on the
farm during summer, and spend winters on the
mountain to be close to their rental cabins and
ski trails.
Business dimensions
It is a highly seasonal business, with the peak
months being JanuaryApril. Summer demand
is slight, and in the autumn there is hunting for
moose and birds in the surrounding forest. The
Bergstedts neighbour operates over 20 snow-
mobiles for tourists, but they are considered to
be incompatible with the ski trails and require a
separate system.
Maude and Gunnar operate the cabins
themselves, and he admits it is a lot of work for
little financial return. They have no employees
and say that labour costs in Sweden are far too
high and therefore paid staff are unaffordable.
This means all the physical work (cleaning and
maintenance of cabins) must be done by Maude
and Gunnar.
Lack of marketing is an admitted weakness.
The Bergstedts rely on repeat business, which is
a strength, and on word-of-mouth recommen-
dations. Some clients return year after year tothe
same cabin. As well, the nearby ski resort some-
times books cabins for them, for a commission.
Their only advertising is through a German
travel agency network, and this consists of a
small profile with one photograph placed in a
catalogue that contains many competing accom-
modations throughout Scandinavia. They do
not have a brochure for distribution.
When their son, Jon, was studying at
university his personal website was utilized to
generate some business for the cabins, and now
the family wants to develop a separate website
for the cabins. Gunnar believes this will be
successful and acknowledges the need to
generate more business.
Jon has been educated in computer program-
ming and does not want to enter the business,
and a daughter who lives in Stockholm is not
involved. Another son, Jacob, was killed in a
car accident several years ago and that tragedy
permanently changed the family. Jacob was
a champion snowboarder who wanted to live
in the area and take over the family business.
Now there is no apparent successor within the
immediate family.
Most of the cabins have been financed
personally, with some bank loans. Ten years
ago, after their tenth and last cabin was con-
structed, the property market was in crisis owing
to over-supply and bankruptcy sales. Gunnar
believes he only avoidedbankruptcy because his
debts were small. His father had instilled in the
sons a philosophy of self-reliance, and this value
seems to explain why the Bergstedts have not
applied for available European Community
grants to subsidize their development that, and
the fact that Gunnar has not got around to the
necessary paperwork!
128 Chapter 7
146
The entire Bergstedt family, including the
three brothers, have a long and deep attachment
to the land. In part this is attributable to being
successors to many generations of inheritance,
and in part to the rural culture and lifestyle
in central Sweden. This involves annual hunt-
ing parties for birds and moose, resulting
in supplies of meat for the entire year. Skiing
is an essential ingredient, and more recently
snowmobiling, and for the younger generation,
snowboarding. Living and working in the
forest, including tree cutting and sawing, fits
the preferred lifestyle.
Very recently the three brothers, Gunnars
son Jon, and two nephews, together purchased
1000 acres adjacent to their mountain land-
holding. They will cut lumber for a pulp
and paper mill in Norway, thereby generating
revenue. This might also facilitate future prop-
erty developments, and will definitely ensure
continued hunting privileges for the family.
Farming is no longer a subsistence activity
in this region, but rural traditions associated with
farming and forestry endure. Gunnar recognizes
that his family cabin business is related to a
lifestyle preference, and wants this to continue
through his retirement. However, the future of
the business is not certain.
Would Gunnar recommend this type of
business to another family? He is doubtful, citing
hard work, minimal financial returns and the
normal challenges of working with close family
members. He thinks his arrangement, with the
brothers andother family members, is somewhat
unique and definitely not typical of family
businesses in this region.
With the loss of their son and intended
business heir, the Bergstedts are uncertain
about continuing this tourist-cabin business.
For 2 years the family business was essentially
frozen, because of the tragedy. Now it is time to
get it back on track and plan for the future.
However, Gunnar does not want to build
more cabins, given the costs and work involved.
The Bergstedts goals remain lifestyle-related
and Gunnar would ideally like to maintain his
traditional farming life in the mountains of mid-
Sweden. There is the possibility of selling cabins,
but once they are gone the potential earnings
from the remainder might be inadequate for
their needs. Another option is to sell the whole
operation as their retirement fund.
Case 7.2 Cricklewood Hotel
Background
Cricklewood Hotel, originally built in 1885
as a coachhouse, is a popular restaurant and
accommodation establishment in the village of
Bothwell, Scotland. It offers a relaxed family-
oriented restaurant, a conservatory and a beer
garden. An extensive menu is available and
food is served from 11 a.m. to 11 p.m. each
day.
Cricklewood is an attractive Victorian
property, set off the main Hamilton to Glasgow
road, with parking and a garden area that was
originally built for the manager of a local colliery
in 1890. In 2002 one of the leading hospitality
and leisure companies in the UK bought the
six-bedroom Cricklewood Hotel. It is located in
the conservation village of Bothwell, Scotland,
which is 15 miles from Glasgow and 40 miles
from Edinburgh, and has a population of 6000,
mainly composed of professionals. Plans are
afoot to transform it into a leading-edge enter-
tainment venue, the likes of which the region has
never previously experienced. This is a far cry
from 1979 when its lease was put on the market
at the price of 15,000. At that time it was being
run as a B&B with a turnover of 11,000 per
year, which was mainly derived from a contract
with British Gas to accommodate long-term
unemployed men who were being retrained.
Family dimensions
Still with little in the way of adequate finance
as a young couple, Alison and Colin, then in
their early 20s, were supported by Colins
grandfather who stood as guarantor to secure
funds from the Bank of Scotland. Business
advisers were drawn from the circle surround-
ing their parents and were of the same older
generation of family lawyers and accountants
not up to date with modern-day commerce.
Although business entry had been made
financially easier through the lease arrangement,
it had been drawn up and approved by the
family lawyer who would have been duped
into agreeing to certain clauses by the landlord
including responsibility for all internal and
Family-owned/-operated Small Hotels 129
147
external repairs to Cricklewood. The building
was old, sick and had not been designed
to withstand commercial usage; understandably
repair and maintenance costs were extensive.
As Colin and Alison worked harder and the turn-
over increased, so did the rental. By 1981 they
had two sons under the age of 2 who they rarely
spent time with due to the hours, demands and
complexity of the ever-growing business. The
work/life balance was becoming increasingly
problematic and stressful. Alison tried a partial
withdrawal from the business to care for the
children in the recently purchased family home,
but felt excluded from the partnership. The
couple were faced with a real dilemma: they
have created a thriving and ever-flourishing
business that is stretching their capabilities to
effectively manage it, and at the same time to
maintain harmonious marital and family
relationships.
Business dimensions
Local competition was negligible. Into this virgin
market Colin and Alison imported a Canadian
coffee shop concept and incorporated it into the
bar and restaurant area of the hotel, quickly
creating a popular meeting and socializing place
for local residents. By 1984 turnover had
reached 250,000 the concept was a signifi-
cant success . . . but life was not without its
challenges.
In 1984 they reached the difficult decision to
sell to Colins younger brother Nigel, who had
worked with the couple for 5 years since he was
17 years old. The selling price for the lease was
set through the emotional criteria of: wanting to
give the brother a good start in business at a
young age; his view of the hotel as his home;
and a desire to get out of the business deal
without the hassle of putting the lease on the
open market. The lease was handed over to
Nigel for a family gift price of 25,000.
Turnover at Cricklewood Hotel continued
on an upward trajectory with little or no alter-
ation to Colin and Alisons original concept.
Nigel managed to negotiate with the landlord to
buy the property outright for 300,000 and sold
it on to a Plc. in 1992 for 1 million. On reflec-
tion, Alison in particular feels bitter about how
things worked out, and often agonizes on what
might have been in wealth terms if she and Colin
had persevered, and resents Nigels success
based on what in effect was intellectually their
property.
Case 7.3 Millestgrden
Background
Johan and Malin Antman own and operate
a small hotel called Millestgrden outside the
village of Duved near the Swedish resort town
of re. Their 1 ha property lies close to the main
highway to Norway and overlooks a beautiful
river valley, with ski hills only a short drive
away, and ski trails within 200 m. It is also adja-
cent to a historic site with a monument that is
well marked on the highway and which attracts
visitors to drive right by the hotel.
Millestgrden has 23 rooms with 60 beds, a
restaurant and small conference room. At peak
times there are around 50 guests on average. It is
a pensionnat, normally providing roomplus two
meals per day. Showers and toilets are shared
(not en suite), so the hotel caters to more budget-
conscious families and groups, including busi-
ness meetings. There is also a sauna, billiards
and table tennis for guests.
An inn was locatedon this site in 1880, serv-
ing passing highway trade, while the current
hotel was built in 1945 and expanded in 1965.
The previous owner went bankrupt after having
invested heavily in the property, particularly by
completely renovating the restaurant. Johan,
who was then living on an adjacent farm, saw
the opportunity and purchased the business for
much less than it would otherwise have cost. He
and his wife have owned it for 3 years.
Family dimensions
Johan came to the re resort area in 1991 as a
ski instructor and decided to stay. It was his idea
to own a business and take root. He previously
managed the Backpackers Inn, located in the
centre of re, and continued to run it for the first
130 Chapter 7
148
year after purchasing the hotel. Neither he nor
Malin had formal training in hotel management,
but Malin is now completing chef courses since
she does the restaurant cooking. Johan is learn-
ing the business as he goes, drawing on friends
and even the previous owner for advice. He still
does some work in winter for the ski school, and
in summer they take bookings by telephone for
a local adventure company. When possible,
he uses this service to attract additional hotel
business.
The primary motivation for purchasing
the business was to provide the family with the
opportunity to stay permanently in the area. The
Antmans have three young children, aged 2, 3
and 6, and this presents them with a challenge.
Usually the children go to a day-care facility, plus
babysitters are brought to their private quarters
at busy times when both Johan and Malin are
working. Occasionally there are difficulties in
balancing work and family life, but Johan feels
he is able to spend more time with the youngest
than he did with the two older children, because
they are nearby. On the other hand, the work
means they do not always get the free time with
the children that they want.
Johan and Malin were at first apprehensive
about working together on a daily basis, after
holding separate jobs, but they say it has worked
out perfectly. Johan tends to get up early and
make breakfast for the family, while Malin works
more in the evenings. This shift work was not
planned but developed naturally.
During winter the days are very long and
sometimes stressful as they are constantly on
call. Contacts with friendly customers can some-
times interfere with work, while at other times the
children might get in the way of guests. This year
they took a holiday for twoweeks in midJanuary
when demand was low, and this is only possible
by completely shutting the hotel. The children
went to stay with grandparents while Johan and
Malin went skiing on the continent.
The best aspect of running a family busi-
ness, at least for Johan, is the ability to manage
his own time. Some jobs are dirty and undesir-
able, but there is a lot of variety. Guests are
friendly, and so work can be very enjoyable. If it
wasnt fun, I would not do it comments Johan.
The children like to help with little things in
the hotel, but of course are too young to stick to
any task for very long. When they get older,
perhaps 15, the parents might employ them in
paid work in a part-time capacity, thereby reduc-
ing the need for other staff. Johan says these
would be real jobs.
Johan could not think of any other families
in the area, with children, who were running
tourismbusinesses. He is currently the chairman
of the Duved industry group and so he person-
ally knows most of the operators nearby. He feels
parents might be afraid of taking the big step,
whereas brothers and sisters might find it easier
to get into business together.
Business dimensions
The winter season is dominant, owing to the
popularity of skiing and other winter sports.
The Antmans more or less close the hotel in
the quiet months of May, June, September and
December, but as they live on the premises they
open it for functions or groups if there is
demand. They employ no full-time staff and do
most of the work themselves. When demand is
high they use local, part-time workers to help out
usually in the evenings including dinner time.
The winter season is busy and financial
performance so far has been good, but as with
many businesses in this area cash flow becomes
a problem late in the year (autumn). That is
when banks extend credit to small operators to
see theminto the winter peak season. If summer
demand could be improved, this family could
hire one or two permanent staff to lift the heavy
workload burden.
Marketing is mostly done through res
main promotion and booking company (www.
areresort.se), and because this service is owned
by the dominant ski-lift and hotel company,
small operators worry that they are not necessar-
ily getting equal attention. On the other hand,
this company has considerable resources for
promotion and development of the resort.
In the main re promotional booklet Millest-
garden has a small photo and profile within the
Duved section (the company promotes One ski
resort, five villages) It is described as an authen-
tic regional pension in a natural and quiet
environment at the Carolean soldiers monu-
ment 2.5 kmwest of Duved. Packages including
skiing and accommodation are offered.
Family-owned/-operated Small Hotels 131
149
They also have their own Internet site
(www.millestgarden.se), but it is not set up to
take direct bookings. Their own 1-page flyer
describes the hotel as a genuine Jmtlandish
guesthouse in scenic and quiet surroundings
located 2 km west of central Duved in western
Jmtland. Our speciality is traditional cooking
from Jmtland. This includes fresh fish from the
lakes and rivers of Jmtland, reindeer, moose
and many more locally grown products. It
promotes local recreational activities, including
fishing in the river, mountain biking, sightseeing,
golf, Sami cultural attractions (the regions native
people), rafting, caving, climbing and boogie
surfing on the river.
Duved needs to be marketed better as
a destination distinct from re, according to
Johan. Their tourism industry group, of which
he is chairman, finance a tourist information
bureau, but more cooperation is needed to build
demand during the 2.5 months of summer that
is currently a low period.
Expansion of activities and decreased
seasonality are desired, rather than any expan-
sion in bed capacity. In fact, the Antmans are
contemplating the elimination of ten beds in
order to allow the addition of small meeting
rooms to help develop the business meetings
segment.
The property includes an old, unoccupied
house, and a barn, which both figure in the
Antmans expansion plans. In the house could
be developed a small cafe, souvenir shop and
information centre to take advantage of the
adjacent historical site. There is a Carolean trail
concept along the highway linking Sweden and
Norway, recounting a failed invasion hundreds
of years ago. Some European Community funds
might be available to help develop the house as
part of this tourism concept, specifically for the
audio-visual component, and the re Kommun
government might also contribute to refurbish-
ment of the house to help develop tourism
infrastructure.
The barn can be incorporated, but turned
into a venue for historically themed (1700s)
functions. This would also be aimed squarely at
the conference market, including those staying
on site or elsewhere. The family plans to do all
the work, and is looking 5 or 6 years into the
future for completion.
Succession or disposal of the property is not
currently an issue, as the Antmans are still in
the developmental stage. The children are too
young to participate in the business, but the
parents would like them to be able to continue
to live in this attractive rural area.
Chapter Summary
There is much to be learned from these three
cases in terms of family, business and owner-
ship dimensions of small hotels. Commitment
of family members is paramount in the hotel
business, as the demands are high and the work
hours long. Some businesses can call on the
extended family to assist with the business
(as does case 7.1), or use the business to give
extended family members a start in business life
(case 7.2). This is especially useful when it is
recognized that not all family businesses have
the cash-flow to employ non-family members
(case 7.1). In fact if revenue did improve, these
businesses would employ more casual or per-
manent staff to ease the work load of family
members (case 7.3). In case 7.3, work arrange-
ments evolved naturally among the family, with
a shift-work approach to running the business
being the most agreeable arrangement between
the husband-and-wife team. Their children are
too young to work in the business and if they
ever do so it will be as paid employees. Business
lessons are evident in these three cases, in terms
of having a vision or recognizing a business
opportunity, establishing the business and
developing it successfully. Perhaps the most
tangible lessons in this chapter are in terms of
ownership, which must be handled carefully to
avoid financial or family problems. In case 7.1,
borrowings were kept to a minimum and that
prudent approach enabled the family to retain
the business, in spite of a family tragedy and
business problems of seasonality, property price
deflation and bankruptcy. Retention of owner-
ship would, in retrospect, have been a better
option in case 7.2 for the family concerned,
and any family business disposition will always
involve some agonizing on the part of the
founders.
132 Chapter 7
150
8
Family-owned Nature-based Resorts
Introduction
These case studies cover a number of topics
relevant to all family businesses as well as some
specific issues related to family businesses in or
adjacent to natural areas such as national parks
and waterways. The motivations for establish-
ing resorts adjacent to natural areas are usually
lifestyle-related, but in two cases the families
have held a long-standing attachment to the
area over several generations. These two cases
are OReillys Guesthouse in Queensland and
River Valley Ventures on the Rangitiki River on
the North Island of New Zealand. The rise in
popularity of nature-based tourism experiences
in countries like Australia and New Zealand
also provides a compelling reason for family
business start-up in areas that offer ecotourists,
backpackers and the pleasure/holiday visitors a
unique holiday resort experience in a natural
area. Crystal Creek Rainforest Retreat is a
unique rainforest lodge that accommodates
a range of visitors from Australia and overseas.
Case 8.1 Crystal Creek Rainforest
Retreat (CCRR)
Background
Owners Ralph and Judy Kramer established
CCRR in 1992 after retiring from their
respective careers. CCRR is described as a
140-hectare (360-acre) sub-tropical rainforest
property adjoining the World Heritage listed
Numinbah nature reserve in northern New
South Wales (NSW). The facilities include
luxury accommodation, walking trails, fine
cuisine and a functions centre. In keeping with
the theme of peace and tranquillity, accommo-
dation is limited to seven couples at any one
time, and each bungalow provides total privacy
amidst the rainforest. Bungalows all have
modern facilities and guests can order fine
cuisine prepared on the property by Judy and
served by Ralph. The CCRR has won several
regional and state tourism awards since 1994,
and in 1999 won a national tourism award in
the category of Unique Accommodation.
The CCRR attracts mainly couples fromthe
nearest capital city, Brisbane, seeking to enjoy
the rest and relaxation in the rainforest. The
retreat also holds workshops for birdwatchers,
botanists, natural healers and artists during
the year. It also offers a small function centre
that can cater for small weddings and corporate
groups.
Family dimensions
Ralph and Judy were both seeking a career
change and change of environment, from the
industrial city of Newcastle in NSW. Ralph had
a long-held interest in nature and wildlife and
was active in the conservation movement. Judy
had involvement in the arts and ran her own
art gallery in Victoria. Together they shared a
151
desire to live and work in the rainforest of
Northern NSW where they could combine their
interests. Having the concept of a rainforest
retreat in mind, they then sought the right
location and engaged a number of professionals
(architects, engineers and business planners) to
guide the project.
After 6 years of running the business, Ralph
and Judy are seeking less hands-on running of
the business andwouldlike toemploy more staff.
Currently they employ four part-time cleaners
and one full-time maintenance person, although
two part-timers also assist with maintenance of
the extensive gardens that surround the retreat.
There are also two daughters currently working
in the business (Fiona and Jude) on a part-time
basis; they are acquiring the skills and experi-
ence to work in tourism and hospitality. Jude
is completing a business degree in tourism
management and should graduate in the next
2 years. Rather than moving straight from there
in to a management position at CCRR, Ralph
would prefer that she worked for a larger tourism
enterprise for a while in order to broaden her
work experience. Ralph and Judy agree that
training the children to take over running of
the business is a difficult task, because, in Ralphs
opinion . . . you cant treat your children like
employees. He has observed that the children
do not appear to be as committedto the business
as both he and Judy are, which makes the issue
of disposition and succession a difficult one.
Fiona also works part-time in the business
and has gained some previous experience in
tourism management as an employee of the
local tourism industry association. Her main
interest is in the horseracing industry, and she
maintains that interest through her partners
horseracing enterprise in the neighbouring town,
where she works 3 days per week. Fiona has
a very business-like approach to CCRR and
considers that running at a profit is the most
important business issue. She has ideas for dev-
eloping greater efficiencies in the business, such
as installation of a computerized reservation
system to replace the manual system currently
in use. She finds guests of the retreat demanding,
as they require the full service of bungalows
(daily cleaning and meals). Fionas preferred
option would be to run the administration and
office of the business. She is currently completing
a small business management course at the local
college, acquiring such skills as basic book-
keeping, business planning and business
negotiation skills.
Other family members have worked at
CCRRin the past but are currently pursuing their
own careers. Christine (aged 26) is living in
Brisbane and studying for a degree in Psychol-
ogy. Mandy (aged 32) lives with her husband
andchildinLondonandworks withher husband
managing a small hotel. Another daughter,
Sharon (aged 25) works as a Human Resource
manager in Sydney, for the Furama Hotel. She is
alsocompletinga degree inIndustrial Relations.
Business dimensions
In order to support more full-time staff (such as
a full-time chef to replace Judy), their revised
business plan indicates that 15 bungalows
would be required to accommodate additional
guests who would make use of the fine dining
service. This would need a significant capital
investment and borrowing would have to
increase substantially, an option that Ralph
and Judy do not wish to pursue at this time.
Currently, seven bungalows achieve 80% aver-
age occupancy, with long weekends booked
well in advance. There is a concern that addi-
tional bungalows and guests on site would com-
promise the peace and tranquillity of the retreat.
Consequently, there is a level of capacity that
has to be achieved in order to be financially
viable, whilst avoiding the destruction of the
theme and ambience of the retreat.
Ralph and Judy received requests for bun-
galows with spas (an almost universal require-
ment in the luxury accommodation category),
despite the fact that a natural spring-fed creek
meanders through the property. All bungalows
have been fitted with spas, requiring an addi-
tional investment of Aus$35,000 per bungalow.
Even at the current tariffs of Aus$245 per
night, the payback period for this investment is
considerable. Ralph also has plans for a day-spa
for guests, requiring an additional Aus$50,000
investment, but this could be financed out of the
business funds.
Finance and investment are major issues
for CCRR in an environment of uncertainty with
regard to the internal and external factors that
can impact on business profitability. While the
134 Chapter 8
152
owners are confident in the current internal busi-
ness operations, they also recognize that there
are a number of external factors (such as interest
rates and economic conditions) which can affect
their business plans and operations. While the
constraint may be financial, the opportunities
are unlimited for value-adding through new
products and services to cater for new markets,
such as corporate retreats and natural health.
There is also extensive land available to accom-
modate new value-adding ventures with only
about 5 ha currently used for accommodation.
Ralph and Judy have imprinted their per-
sonalties and vision on the business and the
uniqueness of the experiences and personal
interactions that they offer. They have strived for
recognition in the region as an authentic eco-
tourismbusiness and are sensitive to any sugges-
tions and feedback from their guests and the
wider rural community. As previously discussed,
recognition has been achieved in the form of
awards at the regional and national level, which
has provided for a positive marketing and pro-
motional image for CCRR. They have also
sought constant improvement in the standard of
accommodation, the level of services and the
presentation and interpretation of the rainforest
experience.
Guest feedback (from in-house surveys)
indicates a very high level of satisfaction with the
CCRR accommodation and services, although
requests for more extensive walking tracks are
not uncommon. The construction and mainte-
nance of extensive walk-track systems is an
expensive exercise that can be undertaken in
national parks, but it is unreasonable, in Ralphs
view, to expect this of private operators.
The future of CCRR as a unique business
offering a luxury rainforest experience is bright.
Bookings are made 12 months in advance for
peak periods and there is a growing interest in
new markets for corporate retreats and natural
healing workshops and programmes. The
important decisions that the owners are con-
fronted with are:
Expansion of accommodation currently

seven bungalows, but prospectively 15
needed to support future plans for business
expansion.
Succession what succession or disposi-

tion arrangements should be put in place
over the next few years as Ralph and Judy
approach retirement age?
Within the two issues are a number of
related factors in terms of finance, investment,
training, protection of the rainforest and main-
taining the uniqueness of CCRR. These issues
remain on the table and are openly discussed
with staff and other family members. Ralph and
Judy are unsure about their plans for disposition
of the business. They have enjoyed living and
working in the rainforest environment and
would find it difficult to move away. The nature
of the CCRR business is such that it would
require a unique set of skills to take over running
of the business successfully, and both Ralph
and Judy feel that they have not yet found any-
one who possesses those skills. There is also a
deep commitment to maintaining the environ-
mental integrity of the rainforest, which would
have to be considered in any disposition deci-
sion. Ironically, the very peace and tranquillity
that motivated Ralph and Judy to live in the
rainforest (and has been the basis for their
business success) have been compromised in
the face of the growing demands of running
CCRR.
Ralph and Judy feel that Mandy and her
husband (who is an Italian chef) could take over
running of the business as they have the neces-
sary skills to meet the customers requirements.
However it is unlikely that they will move from
London at this time, so succession plans remain
uncertain. In the meantime CCRR continues
to enjoy success in business and a growing
reputation for excellence at the national and
international level.
Case 8.2 OReillys Rainforest
Guesthouse
Background
OReillys Rainforest Guesthouse is an interna-
tionally acclaimed ecolodge situated in Laming-
ton National Park (a World Heritage reserve),
Queensland, Australia. It is also a unique family
Family-owned Nature-based Resorts 135
153
business now into its fourth generation of
ownership.
The Guesthouse is located a 2-hour drive
south of Brisbane, capital city of Queensland,
Australia, and about 1.5 hours west of the
famous Gold Coast resorts. It is surrounded by
the Lamington National Park, a World Heritage
reserve. The Guesthouse lies at 930 m altitude
and is reached by a twisty, narrow, but sealed
mountain road. The national park service has a
campsite and information centre very close to
the guesthouse. Day visitors use a large car park
next to the Guesthouse. In 2000, 22% of their
visitors were from overseas.
The Guesthouse business started in 1926
but stems from a pioneering settlement on the
land in 1911. It has been kept in the family
through four generations. Many family members
currently work in the business, and it is expand-
ing in new directions. The OReilly family name
is so legendary in Australia that it has become a
valuable brand.
The year 2001 marked 75 years of
continuous operation of OReillys Rainforest
Guesthouse. It remains a successful, growing,
family business with a number of unique owner-
ship and management features. The modern,
tourism-award-winning enterprise bears little
resemblance to the original bark-clad guest-
house that provided the original shelter for
visitors to Lamington National Park.
Accommodation:
three canopy suites (luxury level);
61 view rooms; and
communal guesthouse: six rooms.

Facilities:
spa, sauna and massage;
plunge pool;
games room;
dining room;
bar;
bistro;
lounge;
guest laundry;
theatre for 120 persons;
conference, wedding and function

facilities;
retail shop (Gran OReillys Store); and
library and historical Stinson display.

Bus Service: Five buses are owned and
operated by the Guesthouse to transport guests
to walks and beauty spots. There are daily buses
from Brisbane and the Gold Coast, operated
by other companies. A meet-and-greet service
is available for Gold Coast Airport.
Guided activities are included in room
tariffs, including bird walks, bush dances,
4-wheel drive bus trips, guided night walks, a
flying fox ride across a canyon, history and
nature presentations. Special interest weeks
and weekends are promoted, including Bird
Week in November when all other guest
activities are suspendedin order tohost birders.
Outdoor team-building activities are offered to
groups. The Scrub Club provides activities for
children.
Family dimensions
Pioneering origins and development of
the Guesthouse have been documented
by the OReilly family in a publication entitled
The OReilly Story (to order it, see their
website: www.oreillys.com.au). It is a story of
four generations, beginning in 1911, with no
less than eight OReilly boys from two related
families securing 100 acres each of mountain-
ous land for dairy farming and sheep grazing in
the far hinterland of the state capital, Brisbane.
The McPherson Range was at that time
wilderness, with loggers not far away, and the
state government had the foresight to establish
a national park. This new park was designed
to surround the OReilly lands. In 1914 the
Stockyard Creek Track was carved up the
mountains to provide access to the new park
(proclaimed in 1915), leading to 20 years
of daily horse-trains carrying cream and
wool 15 km to the valley below, and increasing
tourist traffic up the mountain to experience
the remaining rugged wilderness.
Early park visitors had little choice but to
stay in OReilly huts (humpies made from
tree bark), and the boys acted as guides into the
rainforest. Trails were cut to scenic spots for
horseback guests. Herb, Luke and Bernard
were appointed as honorary park rangers, while
Mick became overseer and accordingly the
states first national park ranger. Mick and his
new wife, Annie, left in 1930 to establish their
own farm.
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154
The government had required each settler
to construct a hut on their specific acreage, but
the boys preferred to share one house and that
made two others available for visitors. A hospi-
tality business started to develop, and it looked
rather attractive comparedtothe alternatives. So
in 1926 the first purpose-built guesthouse was
established, and three OReilly sisters moved in
to help run the business, although it was seen as
a temporary measure to boost cashflow until
improved road access would make the farm
more profitable.
A major part of the OReilly legend stems
from a famous air crash in 1937. A Stinson air-
liner, just taken off from Brisbane and heading
south to Sydney, disappeared in the McPherson
Range. Almost a week went by before the
OReillys heard of the tragedy, so it was
an unexpected triumph when Bernard OReilly
trekked into the forest and saved two survivors
after a full 10 days of isolation. This story of cour-
age and skill was very big news, making Bernard
into a celebrity. He later published a book enti-
tledGreen Mountains tomeet the public interest.
A statue of Bernard and the rescued survivors
has been erected at the Guesthouse site.
In 1944 Mick and Annie returned to the
mountain with two sons, Vince and Peter, and
these boys later became the second generation
to run the guesthouse. Mick was Manager of the
operation, beginning in 1946, while Annie ran
the little store that was established in 1951. Both
of them passed away in 1979.
The two sons of Mick and Annie were
both married in 1961 and together they estab-
lished the third generation. Vince married Lona
Murphy and they had ten children, while Peter
married Karma England and they had five
children.
In 1947 the first road was built to the
Guesthouse, finally allowing motor vehicles to
bring in tourists and supplies. By 1960 bus tours
were snaking their way up the oft-muddy
road, but the greater connection with the outside
world came in 1967 when the electricity line was
extended to the guesthouse, replacing the old
generator and wood-fired hot water system. A
year later Land Rovers were purchased to cater
to the needs of older guests who could not do
vigorous backcountry hiking, and in 1975 these
were replaced when OReillys acquired its own
four-wheel-drive bus.
As the business expanded and increased in
complexity, family members have had to adapt.
If they cannot cope with their responsibilities,
family membership is no guarantee of a job.
Onthe other hand, the boardof directors will pay
for a complete university education for family
members wanting to enter the business in a
professional capacity.
Full-time family members of staff share
the marketing responsibilities when it comes
to geographic areas. Shane handles Europe,
Peter has North America, Greg is responsible for
Singapore and Catherine looks after Australia.
Under Peter, there are regular marketing
meetings, and a lot of travel is undertaken.
Business dimensions
A major building project occurred in 1977 to
expand the Guesthouse, and its first bar was
constructed in 1984. The popular Tree Top
Walk was constructed in the rainforest near the
Guesthouse in 1987. Major physical improve-
ments occurred in 1991, the same year in which
the approach road was finally sealed over its
entire length. In 1997 the kiosk (called Grans)
was expanded to handle the growing volume of
day-trip visitors, providing both a retail shop
and restaurant.
A major expansion was brought to fruition
in 1999 with the opening of Canungra Valley
Vineyards. This tourist-orientedfacility lies along
the approach road to the national park in an
attractive valley-floor setting. It is 90%owned by
the OReillys, although the venture originally
had another partner who has been bought out.
The biggest expansion ever to the Guest-
house was realized in 2000, adding 21 guest
rooms, a relaxation centre and new staff
accommodation.
OReillys sought and was awarded
advanced ecotourism accreditation from the
Ecotourism Association of Australia. Although
they do not use the term ecolodge, it does fit
their operation in a number of ways. Perhaps the
biggest difference is that the Guesthouse has
continued to move up-market into the luxury
accommodation category.
Capitalizing on the family brand is on-
going. Gran OReillys Store, at the Guesthouse,
155
includes a bistro, gift shop and other provisions.
It is very popular with day-visitors to the park.
There is now an OReillys line of clothing,
gifts, nature videos, andwine fromthe Canungra
Valley Vineyards.
In the early days all eight OReilly boys owned
separate properties, but built and operated the
Guesthouse collectively. A public company was
formed in 1931, but this action threatened
family ownership. In 1948 Mick, then manager
of the Guesthouse, organized a share buy-back
and de-listed the company, returning it to family
ownership. This covered the guesthouse and
combined properties. Micks sons, Vince and
Peter, became directors of the company in
1957.
In 1994, two family trusts were established,
reflecting the fact that brothers Peter and Vince
owned 90%of the shares, with Lona and Karma
holding the remaining 10%. Joe, the longest
surviving of the original OReilly generation on
the mountain, died in 1989. In the next decade
the third generation started to take charge.
Shane, the current Managing Director, was
appointed director of the company in 1995;
a year later his uncle Vince retired, then in 1998
his father Peter retired.
Today, with ownership under two family
trusts, OReillys remains a flourishing family
business. Fifteen third- and fourth-generation
family members work init. However, there might
be a problem looming in maintaining harmony
and sustaining family control.
The family trusts work this way: all
descendants of the two brothers, Vince and
Peter Sr, automatically become beneficiaries.
However, it is totally up to the two trustees of
each trust as to who gets annual dividends and
how much. The first dividends were paid only
four years ago, with Aus$20,000 paid fromeach
trust in equal allocations. Shane believed this to
be a perfect model when it was introduced, but
now he has some doubts.
The family trusts serve to keep ownership
and operational control within the family,
but they also ensure that no one can realize a
direct benefit other than wages or dividends as
determined by the trustees. This arrange-
ment is being questioned by some of the third-
generation OReillys who find they have almost
no rights to manage the company or inherit
shares. In effect, the tangible assets of the com-
pany are locked away forever.
One potential problem raised by the family
trusts is that of pressuring family members to
work in the company when they would rather
not. If they could be issued shares or provided
with a cash settlement, they might be happy to
leave ownership and control to others. The risk,
as recognized long ago by Mick, is that family
control might gradually, or even rapidly, slip
away.
The company is managed by a Board
of Directors including family members (two
from each of the two trusts) and two non-
family directors. This board makes operational
decisions under guidance of the chairperson
and executive director (who are non-family).
Structured, monthly board meetings are held.
The non-family trustees are vital, both
in helping to avoid in-family management
problems and in counselling individual family
members. They were sought by the family after
a process of setting out desirable attributes.
Personal relations already existed with the two
external directors before they were asked to sit
on the board.
The board, however, has made important
strategic decisions that did not conform to the
non-family directors advice, as in the case of
taking dominant ownership in Canungra Valley
Vineyards. Family businesses tend to take a
long-term perspective on everything, whereas
traditional company directors often focus on
short-term returns. Regular family meetings
are held (every six months) to keep everyone
informed and to get their input.
The OReillys believe in professionalism, to
the point of bringing in non-family trustees, a
general manager, and other professionals. Jobs
are advertised by the human resources manager
and both family and outsiders can apply. A
written family employment policy covers this
issue.
The dilemma of the family trusts will have
to be resolved. At issue is the means to extract
value for family members while maintaining
family control. Dissolving the trusts and issuing
shares, which could include retention of majority
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156
control, might still have a serious cultural impact
on the company through dilution of family
influence on the board of directors.
Going completely public could eventually
result in the OReilly name remaining only as
a brand, a commodity to be bought and sold.
A number of expansions are contemplated,
primarily to increase accommodation for
both guests (two-bedroom, spa villas) and staff
(self-contained units), and to continue moving
up-market. Approval has been obtained to
construct up to 50 cabins 1 km from the
Guesthouse, but the recent improvements took
priority. Now an equity partner is being sought
for the cabins, but approval will lapse in 2002.
The company alsoplans tosell 50%of Canungra
Valley Vineyards.
Case 8.3 River Valley Ventures,
New Zealand
Background
River Valley Ventures Ltd is situated along the
Rangitikei River on the North Island of New
Zealand. It is a remote setting some 32 kilo-
metres from the nearest town, Taihape, which is
located on State Highway 1. To the north is
Auckland, the main tourist gateway to the coun-
try, and to the north-west lies Lake Taupo and
Rotorua, both major tourist destinations. Most
highway traffic passes through the Rangitikei.
Family dimensions
River Valley Ventures was founded in 1982 as a
registered company by Brian and Robin Sage to
provide white-water rafting. It was a sideline
to their farming operation, made possible by
ownership of 1.5 km of river frontage and
control over the best landing zone. Other rafting
operators had used the road to the river (which
had been constructed by the Sages) on an ad
hoc basis. Initially the Sages provided meals
and refreshments to these operators and
collected a toll. Their rafting company began
with the purchase of two rafts. However, by
1990 Brian and Robin Sage sold their farm
to cover the most pressing debts and sold the
rafting business and Lodge to their daughter
Nicola and her husband Brian Megaw.
Brian and Nicola are shareholders in River
Valley Ventures Ltd and Brian is Managing
Director. A number of shares have been placed
in a family trust, and the Megaws want to move
all their tangible assets into this device to afford
protection to the family against business failure
and to facilitate inheritance. When the transfer
has been completed, River Valley will lease back
the physical assets from the trust.
The Megaws have three daughters, one of
whom, Jane, aged 22, is currently working in
the business. Kate (aged 19) works part-time
in the Lodge, but concentrates on her school
studies. Melissa, 20, is a cook in the Lodge. River
Valley is a second-generation family business in
which extended family ties are an important ele-
ment. Nicolas father, Brian Sage, continues to
be involved in the business through contractual
provision of vans to carry rafters to the drop-off
zone up-river. Mr and Mrs Sage live in a new
house on the cliff overlooking the Lodge and
river.
Nicolas role has not changed as much, but
computerization of their business systems has
eliminated the need for manual bookkeeping.
Nicolas brother, Richard, is an expert kayaker
and uses this vehicle to take action photographs
of rafters and other kayakers. This is a profitable,
sub-contracted element of the business. Richard
also develops and sells kayaks.
The horse trekking operation is contracted
to Brians sister, Shona. River Valley makes the
bookings and takes a commission. The treks are
a very popular feature and can be purchased
with other activities in a package.
The Megaws have never lived at the Lodge,
but own a house 2 km away. This provides a
necessary escape from the constant demands of
staff and guests and keeps family life somewhat
separate from business life. In the early years
they both worked at all jobs, all the time, and
dreamed of employing a manager to relieve
their personal burden. They first took a family
vacation from the business in 1995, for a couple
of days and a trip to America to visit their
daughter.
Brian originally micro-managed the busi-
ness and took parties rafting five days a week. He
has reduced rafting to 1 day a week and now
finds himself doing mostly macro-management.
157
Staff are able to do more, and do not require the
level of supervision they once did, although he
finds delegating authority difficult.
Brian elaborated on the vision: First
and foremost, River Valley needs to keep being
fun! Not only for people who visit, but also for
staff. A hands-on involvement by management
leads to an in-depth understanding of the
business, its opportunities and threats. With this
understanding we can provide the leadership
required to strive for ongoing improvement, and
excellence.
The Megaws extended family is an impor-
tant feature of this case study. Who better to get
involved, and to trust, than family members?
This network might be a somewhat unique
feature related to their isolated location, but
it suggests that family connections could be
important both in start-up and development of
the family business.
Brian Megaw was wishing he was back
on the river, guiding a white-water rafting tour
down the raging Rangitiki, but he was managing
director of a successful family business owned
withhis wife Nicola, andhis rafting days hadlong
since been reduced to once a week, if he was
lucky. A major decision weighed on his mind, as
it involved a NZ$250,000 loan to construct new
chalets at River Valley Lodge. The chalets had
the potential to generate substantial profit and
to reduce his dependency on a single market
segment. However, the history of this family
business included one major financial disaster,
and although it had been followedby a complete
recovery, taking on such a large debt involved
another great family risk. Was the timing right?
Is there ever a good time to borrow so heavily
for a family tourismbusiness? These are some of
the questions that emerge from this case study
when establishing and expanding a family
business in tourism.
Business dimensions
At first the rafting business went well, but
in 1987 the Sages decided to expand, and
constructed a loan-financed lodge by the river.
River Valley Lodge has a beautiful site in a
deep valley, with views of a waterfall and native
forests rising above. It still offers dormitory-style
accommodations plus four double/twin rooms
and a large open area for meals and relaxation.
Showers, toilets and changing facilities for raf-
ters were provided outside. A diesel generator
was first used to provide electricity.
Unfortunately the budgets that formed the
basis of the expansion bore little relationship
to the reality of the situation. By 1990, despite
turnover of NZ$350,000, the annual operating
loss had also grown to NZ$40,000 and the com-
pany was unable to service its debt. The family
went through difficult times as creditors sought
repayment of loans. Finally, Brian and Robin
Sage sold their farm to cover the most pressing
debts and sold the rafting business and Lodge to
their daughter Nicola and her husband Brian.
After taking over from Nicolas parents the
immediate objective was a financial turnaround.
Now, sustainable growth and profitability are
pursued. The owners want to position River
Valley firmly at the top of our industry segment,
both in profitability and in quality of product.
This means River Valley has had to create and
continuously promote itself as a destination in its
own right.
Once the company became financially
sound, improvements and expansions were
undertaken. Electricity was brought to the
Lodge, thereby relegating the diesel generator to
stand-by status. Tree planting was accelerated
for aesthetic reasons, to screen working areas
and improve the views. The original Lodge,
originally used mostly by schools and groups for
outdoor management courses, was upgraded.
The plan had been to convert dormitories into
meeting rooms to accommodate management
team-building groups, but that plan is now
obsolete.
Outdoor management training for groups
has been discontinued, although it once
accounted for about 20% of the business.
Multi-day rafting trips have also been discontin-
ued, leaving the focus on shorter, white-water
adventures. These changes have been made in
response tothe partnershipwithKiwi Experience
(discussed later).
Other recent additions have been the golf
course, an expanded tenting area and a river-
side stage for events. Major growth is not being
contemplated, nor is it desired. A plan to build
three chalet units is the only physical develop-
ment on the horizon, and the emphasis is nowon
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158
improved yield. To meet the needs of older,
more quality-conscious tourists, River Valley is
planning to borrow NZ$250,000 to construct
three chalet-style units on a view-site separated
from the Lodge. Brian calculates that they will
become profitable above 20% annual occu-
pancy and will therefore add substantially to
revenue whilst broadening their market appeal.
The Megaws have been approached with
the idea of franchising their successful formula
elsewhere in New Zealand, but they declined.
Opportunities for new challenges might exist for
Brian elsewhere in the tourism sector. A single,
contractual partnership with Kiwi Experience in
1995 dramatically changed the fortunes and
plans of River Valley. Brian had known the
potential of this market segment, but it took a
visit from Kiwi Experience, and a subsequent
offer, to cement a deal.
Kiwi Experience is one of several coach/bus
companies that cater to the rapidly growing
backpacker market in New Zealand. Visitors,
mostly young and foreign, can use the bus
service (7 days-a-week in summer, 5 in winter)
to access a range of destinations and accommo-
dations all over New Zealand.
River Valley is featured as an overnight and
adventure destination exclusive to Kiwi Experi-
ence (see their website: www.kiwiexperience.
com). The southbound bus (from Auckland to
Wellington) stops automatically at River Valley,
and Kiwi Experience promotes the adventure
activities in its own marketing, so there is a
strong likelihood that travellers will spend a night
there. In fact, the average length of stay at River
Valley is now one night. Occupancy rates are
growing at 4% a year, on a 10,000 person-night
base.
Surveys of Kiwi Experience users consis-
tently show River Valley to be recommended
accommodation. White-water rafting and horse
trekking are two of the most popular and highly
recommended activities by this same travel
segment.
River Valleys market segments changed
dramatically with initiation of this partnership.
Previously, independent overseas tourists
accounted for about 10% of the customer
mix, tour groups were 20%, schools 30%, and
the remainder came from social groups,
clubs, family outings and the like. Kiwi Experi-
ence, however, brings mostly young, foreign
backpackers to River Valley so that the overseas
segment (mostly from Europe) has grown
quickly to account for 80% of customers.
This new, guaranteed backpacker market
has substantially increased River Valley income,
but has also required substantial adjustments.
A new accommodation block featuring simple
bunk-house arrangements had to be built to
accommodate the increased numbers, and the
product was changed.
The partnership contracted with Kiwi
Experience in 1995 changed the marketing
picture completely by focusing attention on the
growing backpacker market andtheir needs, and
by causing the Megaws to get concerned about
potential over-dependency on this one source of
customers. Marketing expenditure as a percent-
age of sales has been falling, fromapproximately
10% in 1997, to 6% in 2000. This reflects
greater success in attracting customers and more
effective communication techniques, especially
through their website.
Brian has determined that only 55% of
guests are purchasing an activity, so clearly
many backpackers view their visit as purely for
accommodation or sightseeing. He realizes that
daily expenditure has to be increased, given the
one-night average length of stay. This led to
development of the pitch and putt golf to provide
guests with a relatively inexpensive (NZ$10)
activity. Food packages, Internet access and
merchandise for sale are other examples of value
adding.
There is also a joint marketing arrangement
that provides visitors with an additional adven-
ture activity, similar to the popular two- and
three-activity packages found in Queenstown in
the South Island (NewZealands self-proclaimed
adventure capital).
Rangitikei River Ventures, by agreement
with River Valley, runs scenic and camp-out
rafting trips but not white-water experiences.
The two companies refer customers to each
other for commissions. Farmstay accommoda-
tion had been obtained through partnering with
the Powell family. The house is situated close to
River Valley Lodge on the Powells working
sheep farm and guests had the option of either
participating in farm activities or simply enjoy-
ing the rural tranquillity. However, the farmstay
is now used for seasonal staff accommodation
only.
159
In the early years, marketing occurred by
word of mouth, limited advertising, partnering
with tour companies, and serendipity. For
example, River Valley worked with one
Australian tour operator who brought skiers to
the volcanic slopes of Mount Ruapehu 2 hours to
the north. A director of the company arrived
at River Valley as a client and was so thrilled
with the product that he incorporated the rafting
experience into his own package. However, raft-
ing was secondary to the skiing, and therefore
business from this source was dependent on ski
conditions. When the skiing was bad, rafting
demand increased. An added complication was
that bad weather required extra transport costs
to get customers to suitable river areas.
Monitoring of advertising in magazines
revealed that only 8%of demand was generated
this way, yet it accounted for 80% of River
Valleys promotional expenditure. That had to
change, so in 1996 they cut back on magazine
ads, increased their production of brochures
from 20,000 to 30,000, and employed targeted
brochure mail-outs using their customer and
contact database. More careful targeting of
intermediaries who could bring their customers
to the Lodge was also attempted. Joint market-
ing through the Rangitikei Tourism Association
at trade shows was initiated, including participa-
tion in New Zealands annual Tourism Rendez-
vous (TRENZ) where inbound tour operators
and suppliers meet.
Another marketing initiative was the famil-
iarization tour, wherein River Valley brought
in car rental staff, tourist information centre
personnel and others to visit the site. Farm
tours are now offered to accommodation
providers who see the Kiwi Experience back-
packers earlier in their New Zealand tour, so
that recommendations can be made concerning
accommodation and activity options.
Branding has become important to River
Valley, nowthat they are a success. Their brand-
ing effort is built on the constructs of quality, the
river, excitement, and an outdoor adventuring
NewZealand experience that is at once safe and
fun. In 2000 a new logo captured the essence
of this brand; it has an authentic New Zealand
feel to it, reminiscent of Maori designs. Their
new posters, website, and merchandise push a
consistent message. A new poster features their
website address and the slogan what are you
waiting for? River Valley phone cards and the
occasional production of CDs complement the
marketing effort.
River Valleys website (www.rivervalley.co.
nz) is viewed as their primary offer of informa-
tion, replacing brochures. The number of unique
users of their website has grown to over 300
per week (March 2000). The website is used
mostly for information-gathering, and like many
other tourism operators River Valley has found
resistance to on-line bookings.
Did the Megaws seek to create opportuni-
ties for personal fulfilment through economic
activity? (see for example: Morrisonet al., 1999).
What role does the founder play in operating the
business, and does that change over time? Is
entrepreneurship an inherited personality trait?
Above all else, consider the nature of risk-taking
in establishment and growth of a business, and
the possible pitfall of over-confidence in ones
own capability.
This case is rather unique in that it provides
a longitudinal examination of the companys
development and of a family business success-
fully inherited and developed by the children.
Furthermore, this case presents a clear success
story froma purely business perspective, while at
the same time generating questions regarding
small business strategy and the future of the
company and its family owners. It provides
many insights into the nature and challenges of
developing a rural tourism/hospitality business.
The case illustrates how an easy-to-enter,
sideline rafting business quickly took over the
Sages lives and resulted in a financial disaster.
The absence of a business plan, lack of cost con-
trols, excessive personal debt and inexperience
in operating and marketing a growing tourism
business were all contributing factors. High reve-
nues at first hid the problem, leading to develop-
ment without sufficient cashreserves toride out a
lengthy period of asset building. The farm and
house were sacrificed, although sufficient land
and the Lodge were retained to permit a fresh
start.
What is amazing is that the business was sal-
vaged by the children who grewit into a financial
success. Inheritance of family businesses in the
rural tourism and hospitality sectors is believed
to be rare (see Getz and Carlsen, 2000), for
142 Chapter 8
160
several possible reasons. Many such businesses
are based on high levels of debt and/or sweat
equity, and while they can sustain a family
they do not often present an attractive or viable
option for the next generation. Furthermore,
many rural tourism and hospitality businesses
are rooted in lifestyle choices that might not
be shared by younger adults, or in the need to
generate some additional income for farmers
inheritance of a farm does not necessarily entail
continuation of the sideline business.
The decision of the children to take over the
business was not made lightly. Brian had met
Nicola while both were students at university in
Auckland, but when married they returned to
their rural roots. By 1982 Brian was managing a
sheep-shearing gang, and had little relationship
with the rafting business. Brian and Nicola had
contemplated starting their own sea-kayaking
business in the Bay of Islands and had already
followed their leisure interest by exploring that
area and its potential. They had even drawn
up budgets. With the financial crisis at hand,
however, Nicolas parents were threatened with
losing both the farm and their home. Given that
the rafting operation had made money, it was
decided to try to save the business.
In the Megaws case family loyalty, ties to
the land, and personal leisure interests com-
bined to make the salvage attempt attractive.
Much hard work and worry followed, but the
family was able to capitalize successfully on their
effort, talent, and vision of what the business
could become.
Brian persuaded the creditors to keep
the business going, arguing that its assets were
insufficient to pay the debt. The only way out
was to turn it into a profitable business, and it
had certainly shown its potential to generate
revenue. Most of the problems, according
to Brian Megaw, were created by poor cost
controls, accounting andmanagement practices.
It was a case of good ideas on the part of the
Sages, but inexperience in the practicalities of
operating a tourism business.
Brian and Nicola sold their own house
and its 5-acre plot to raise capital, and for a year
they juggled debts, paid cash for everything,
introduced proper accounting procedures,
saved and scrimped, argued and survived. By
1994 a small net profit (after tax) of NZ$30,000
was realized on turnover of NZ$230,000. This
represented a decrease in total revenue, but
owing to retrenchment, a firm profit on which to
build.
Since then it has grown into a profitable
business and has become a destination for
adventure activities and backpacking, attracting
over 10,000 visitors annually. River Valley oper-
ations in the year 2000 generated for the first
time NZ$1 million in annual sales.
Brian is not yet ready to contemplate
retirement, and in fact has ambitions to improve
the business inother ways. He has thought about
succession and thinks that at least one of their
daughters might have the vision and drive to
take over some day. A real question is whether
the children will have the necessary manage-
ment skills to run such a business, with more
and more technological skills being required.
Creation of the family trust will ultimately
facilitate inheritance of all the tangible assets,
while in the meantime it pays allowances to the
children. Whether or not any of the daughters
take over the business, Brian feels that the
experience of growing up with it has broadened
their horizons considerably.
Chapter Summary
These three cases illustrate that establishing and
running a family business specializing in tourism
in the natural environmental is a very attractive
option. All of these businesses offer unique
opportunities for guests to immerse themselves
in nature at the same time enjoying a
high standard of accommodation and service.
It is apparent that the natural environment is
the basis of these business activities and the
traditional family connections with the environ-
ment (in cases 8.2 and 8.3) and personal
values (in case 8.1) are the prime motivators
for the family businesses. Ironically, the success
of these businesses acts to limit the amount of
time the families can actually spend enjoying
the natural area, which attracted them in the
first place.
161
References
Entrepreneurship in the Hospitality, Tourism
andLeisure Industries. Butterworth-Heinemann,
Oxford, UK.
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162
9
Family-owned and -operated Tour Companies
Introduction
These three case studies cover a number of
topics relevant to all family businesses as well as
some specific issues related to family-owned/
-operated tour companies. The reasons for
establishing a tour business in these three cases
seem to be in response to an opportunity that is
recognized and pursued by the founders and
their families. It may be that design and delivery
of land, marine and adventure tours attracts
more creative and entrepreneurial family busi-
nesses. The capital-intensive nature of these
businesses introduces particular issues for
funding the establishment of the business. In
most cases, founders have had a working life
before going in to business that provides them
with the capital, skills and motivation (in the
form of a desired career change) to commence
in business. Once in business the challenges of
further expansion, marketing, staffing, season-
ality and customer interaction are confronted
with the same degree of enthusiasm and com-
mitment that was evident at business start-up.
Case 9.1 Wild Over Walpole (WOW)
Background
WOWWilderness operates cruises with two tour
vessels on waterways of the Walpole-Nornalup
National Park on the south coast of Western
Australia. The 2.5 hour Wilderness Cruise
departs at 10 a.m. every day from the town jetty
in Walpole and returns at about 1.00 p.m. The
current costs are Aus$20 for adults, Aus$10 for
children under 14 and free for children under
5 years old. The 3.5 hour Sunday River Cruise
operates in the summer and costs Aus$25 for
adults, Aus$15 for under-14s and free for
under-fives. Both tours include a detailed inter-
pretation of the natural, social and historical
aspects of the area and guided walks at selected
sites. Active participation is encouraged in all
aspects of the tour and interaction and discus-
sion over tea and homemade cake is a feature
of the tour. Current capacity is 18 passengers
on the smaller vessel The Naughty Lass and 48
passengers on the larger vessel Rainbow Lady.
Family dimensions
WOW is a family-operated boat tour company
owned by Ross and Marion Muir, who started
the firm, together with their son Gary as a
partner. There have been seven generations of
Muirs in the area as farmers and WOW is the
first tourism-oriented venture. Marion is finan-
cial manager while Ross and Gary handle the
cruises, but roles are not fixed and do overlap.
Gary has considerable professional experience
working with the Department of Conservation
and Land Management (CALM), the state land
management authority. He also does outside
consulting, computer-assisted design, environ-
mental science and guiding, all under the Wild
163
Over Walpole Wilderness Services business
name. He is poised to take over the tour
business when his parents retire and hopes to
expand it by diversifying the products offered
under the WOW umbrella. His vision is to
expand the business his parents created,
possibly in partnership with his cousin, Rob,
whose family currently operates a houseboat
and B&B business in Walpole.
Ross has a farming and fishing background
and brings a wealth of historical knowledge to
the WOW cruises, which he takes when Gary is
not available. Since starting WOW, Ross has
been active in the local business community and
was president of the Walpole Tourist Association
for 2 years. Ross has also managed a number of
land management projects in the area, including
a tourist boardwalk project in the Tingle forest.
Marion manages the finances of WOWand
has developed considerable skills in managing
farm finances, which are now applied to the
business. She is also becoming proficient in the
use of computers and account-keeping software,
which she enjoys. Gary conducts most of the
daily tours and works with local land manage-
ment agencies on projects that support the
mission of WOW. He has initiated a range of
projects that will enhance the WOW experience
and will develop new products and services
including accommodation, foods (basedonlocal
bush tucker), outdoor adventure and scientific
research expeditions into the wilderness.
Business dimensions
Ross and Marion Muir set up the business as an
opportunity to generate income in their retire-
ment and as a self-employment opportunity for
themselves and their son Gary. The Muir Fam-
ily has had a long association with the region
around Walpole, commencing with farming and
later in retail. The goal of living and working
in the region that their family pioneered
and helped to establish was important and the
historical and personal links with the region are
themes that run through the Muirs family and
business life. Traditional cattle farming in the
region was becoming less viable in the 1990s
and although the family retained ownership of
extensive farmlands, only the eldest son and his
family continue to operate the family farm on a
full-time basis. Ross had tried other forms of
employment after leaving the farm, including
a stint as a commercial fisherman, during
which time he renewed his interest in the
ocean and inlets surrounding Walpole. When
the opportunity to purchase their first tour boat,
The Naughty Lass, presented itself in 1994,
Ross and Marion embraced the idea. Within
one week of that purchase, a second con-
siderably larger tour vessel became available
and Gary, who was working as a land manager
with the Department of Conservation and Land
Management, was included in the decision to
acquire it. Gary had considerable experience
and training in environmental management and
interpretation; combined with Rosss extensive
knowledge of the social history of the region
and Marions skills in financial management the
WOW business was formed.
The first few years of operation were on
a limited basis and tours were conducted mainly
in the smaller of the two boats. Gary had
committed to a major project in the region and
had limited time to devote to the business. Con-
sequently Ross conducted the tours and kept the
business operational. Upon completion of the
project in 1996 and the gaining of a coxswains
certificate, Gary was ready to make a full-time
commitment to the business. The project that he
managed, the construction of a major nature-
based tourism attraction in the Valley of the
Giants near Walpole, provided a significant
boost for tourism in the region. This is indicated
by the increase in visitation to the Walpole
Tourist Bureau after September when the Tree
Top Walk opened in 1996 (see Table 9.1) and
provided direct benefits for the WOW business.
After 1997 interest and awareness of WOWgrew
through favourable word of mouth, television
programmes featuring the Tree Tops Walk and
WOW, and some advertising through tourism
promotional magazines and brochures.
The initial capital investment in the business
was drawn from Ross and Marions retirement
funds so it is essential that the business generates
sufficient retirement income for Ross and Marion
as well as an income for Gary. This financing
arrangement, whilst avoiding the need for
investment loans fromfinancial institutions, does
not mean that the investment decision is less
risky. On the contrary, as Ross and Marion reach
146 Chapter 9
164
retirement age there is added impetus to ensure
that the business is profitable into the future.
Periodic injections of funds are required for
running the boats and new motors have had to
be purchased for both vessels in the last 2 years.
In the near future the larger of the two vessels is
marked for a re-fit, with major modifications to
the hulls and to the waste water storage tank held
within the hull. The vessel should have a larger
capacity after re-fit and should also generate
higher revenue. At present WOW turnover is
about Aus$125,000 per annum based on about
8000 passengers. Fortunately, the major re-fit
can be funded through plough-back profit or
reinvestment, rather than through any new
financial injection.
The long-term goal for the business is con-
tinued growth. This will be based on the larger
capacity of the Rainbow Lady that will allow it
comfortably to handle coach-loads of patrons
on a daily basis in addition to the current fully
independent traveller/tourist market. Presently,
the majority of visitors are from within Western
Australia (WA) and are mostly self-drive tourists
from Perth (Perth is the capital city of Western
Australia), a five-hour drive from Walpole.
WOW has had some success in attracting coach
tours from provincial centres within WA and
plans to continue to grow this market. Older
persons predominate WOWs visitors. The tours
are promoted through the local Walpole Tourist
Bureau and also through accommodation
providers in Walpole and other towns within the
region.
Supporting the attainment of this long-term
goal is a detailed set of goals and objectives for
the product and the business. WOWs mission
statement is . . . To be leaders in sustainable
nature-based environmental tourism offering
our clients a blend of ecological, cultural and
adventure opportunities. WOWs objectives are
to provide visitors with high quality experiences
based on the natural environment, to implement
best practice in environmental management and
to expand, protect and restore the land and wild-
life. A number of projects are already in place
that will result in the restoration of biodiversity
of the wilderness areas visited on the cruise as
well as research aimed at increasing scientific
knowledge of wilderness. Gary has a vision for
WOW that encompasses a team of specialists
that will each contribute to a greater understand-
ing of the biological, cultural and traditional sig-
nificance of the wilderness. This knowledge will
then be imparted to visitors thereby encouraging
deeper appreciation of the historical impacts
of European settlement on the environment and
aboriginal inhabitants of the area. Garys
interpretation of the natural and cultural
history of the area carries a very powerful
message that promotes friendship, tolerance and
understanding between cultures and people.
Family-owned/-operated Tour Companies 147
1994 1995 1996 1997 1998 1999 2000 2001 2002
January
February
March
April
May
June
July
August
September
October
November
December
Total
2,427
1,872
1,611
1,761
1,002
912
600
467
1,127
2,721
970
1,921
17,391
2,149
1,720
1,602
2,176
972
847
622
1,109
1,271
2,911
1,159
2,071
18,609
2,560
1,892
1,511
2,819
2,500
1,087
981
1,317
3,109
4,017
4,610
5,418
31,821
6,503
3,111
4,758
4,718
2,486
1,667
2,465
2,013
4,621
5,516
3,,461
4,629
45,948
7,679
3,327
4,008
6,620
3,387
2,027
3,100
2,750
5,811
5,978
4,132
5,320
54,139
8,438
4,264
4,453
7,249
3,549
3,007
3,958
3,279
6,923
7,313
4,848
5,952
63,233
9,594
4,616
5,503
7,459
3,890
2,952
3,006
2,957
6,407
7,062
5,257
6,926
65,629
11,656
5,526
6,796
7,822
4,396
3,350
4,304
3,968
6,773
8,830
6,236
7,977
77,634
11,887
6,294
7,812
7,302
4,475
3,358
3,792
3,539
7,125
8,643
6,897
7,705
78,829
Note: Bold type denotes Tree Top Walk opening.
Source: Derrin Foster, Manager, Walpole Tourist Bureau.
Table 9.1. Visitation numbers for the Walpole Tourist Bureau, January 1994April 2000.
165
All family business members agree that Gary
will eventually take full control of the running of
the business. Gary has a high level of commit-
ment to the mission and objectives of WOW
and will pursue his plans for expansion and
growth under the WOW umbrella name. He
has spent 5 years developing and recruiting
a group of friends who have specialist skills
in interpretation, scientific research, traditional
use of natural flora and fauna for foods and
medicines (called bush tucker) and outdoor
adventure. He is also keen to include his cousin
Rob in the future business structure, but he
alone will retain ownership of the WOW busi-
ness name, and hence it will remain a family
business. He has made a substantial emotional
investment in the business, as well as a financial
investment in the expansion of WOW. On the
other hand, Ross and Marion have a purely
business approach and would mainly like to see
a financial return at the end of the day. That is
not to say that they are completely detached
from the business. Indeed, all three family
members hold a great deal of pride in WOW as
well as a deep love of the Walpole region and
all that it holds. This theme runs right through
the business. Ross and Marion will continue to
operate a small B&B as part of their private resi-
dence in Walpole, which they can comfortably
maintain in retirement. The succession and
structure of WOW has yet to be finalized and it
may be the case that Ross and Marion draw an
annuity from the business.
Should Ross and Marion bequeath to Gary
a business that is unencumbered with debt, it
would provide an ideal platform upon which
Gary can realize his vision for WOW and the
Walpole wilderness area. Ross and Marion
realize that Gary has a great deal to offer, as well
as to learn, and are keen to see him succeed.
However, their enthusiasm is balanced with the
pragmatismthat they have inherited fromgener-
ations of Muirs who farmed and ran businesses
in the region. In many ways it was farming and
business that was the genesis of WOW, and the
Muir family farm remains an important link with
the past as well as a key to the future of WOW.
WOW is much more than a family-owned
and -operated tour boat operation, as it repre-
sents a substantial component of the social,
economic and environmental fabric of the
Walpole region. An Australian songwriter, Paul
Kelly, once penned a song titled From Little
Things, Big Things Grow and this truism could
equally be applied to the WOW business. Many
lives and many more miles of wilderness have
been touched by WOWs activities in a positive
way, and maintaining that positive interaction
and contribution to the wilderness remains a
unique vision shared by Gary Muir and his
family and friends.
Case 9.2 Minnewanka Tours
Background
Minnewanka Tours is a family-owned, seasonal
business within Banff National Park, Alberta,
Canada. The Mackie family, consisting of
husband and wife Ian and Brenda, and niece
Diane, have an exclusive lease from the park
authority to operate a marina and boat tours on
the parks largest lake (and the only lake in the
park where motor-boating is permitted). They
handle 40,00050,000 customers a year.
The business consists of the following:
three tour boats;
21 rental motorboats;
marine gas sales; and
snack/retail shop (tackle and souvenirs).

In addition, the family owns a chartered
fishing company with six boats, operating out
of the same lakeside facility and utilizing the
same staff. The Mackies lease office space in
the nearby town of Banff, and also have office
space in their home in Banff. In addition they
have a leased house at the lake where up to eight
seasonal staff stay. Operations are permitted
for only 5 months of the year, but actual business
at the lake occurs for only about 4 months
(MaySeptember) owing to prohibitively
freezing conditions.
Lake Minnewanka is the subject of a book
by R. Sandford, who describes the history of
recreational use of this beautiful body of water.
It was prepared with the co-operation of the
Mackies and includes a number of photos of
theirs and previous tour boats. The books
introduction by Ian and Brenda states:
148 Chapter 9
166
For more than a hundred years, visitors to
Banff have been enjoying boat tours on Lake
Minnewanka. The same stunning scenery that
enticed passengers off the train to visit the lake
in 1889 still attracts people to the Lake of the
Water Spirits. We are proud and fortunate to
be the stewards of the lake and its boating
tradition today.
Family dimensions
The Minnewanka Tours Co Ltd was formed
in 1977 when Ian and Brenda purchased the
operation from an acquaintance. Originally
there was another married couple involved,
but that partnership did not work well and the
Mackies bought them out after the first year.
Following a career with a major company
involving a variety of engineering and manage-
rial experiences (in tourism and recreation),
Ian was looking for self-employment. He
wanted a hands-on, challenging venture,
which he describes as being vital to his life.
He explained: If I put the same energy and
time into my own business as I gave to the
company, I knew it would be successful.
Also, he wanted it to be a family business
in which both he and Brenda would work
together.
Ian was not particular about the type of
business or location, but Banff was a natural
choice since he had grown up there and had
most recently been manager of the Banff Springs
golf course. The opportunity arose at a personal
level when the former operator of the boat tours
made it known to the Mackies that he was
interested in selling the business.
Brenda had also been working in Banff and
was not particular about whether or not Ian
was self-employed, but was supportive of the
business idea and of staying in Banff. In a family
business, she says, you are a master of your own
destiny.
Over the years a number of nieces and
nephews have worked seasonally for the
Mackies at the lake and stayed with Ian and
Brenda in Banff. Without children of their own,
the Mackies had to look to other relatives
if they wanted the business to stay in the
family. A nephew was considered for full-time
employment, but that did not work out.
Diane started to work during summers at
the lake in 1987 and she in particular became
much like a family member. Nevertheless, in
1998 she was surprised to be contacted in Van-
couver, where she worked, and asked by Ian to
become manager of Minnewanka Tours. Her
university education had been in economics,
and she had gained experience in almost all
aspects of the business, so she felt confident but
challenged. The idea of living in a small town
appealed to her a great deal, and she had always
enjoyed her summers spent in the mountains.
Bank financing has been used to purchase
and develop the business. At first their personal
guarantees were required, but later the business
became successful enough to secure loans with-
out them. Possibly a planned new tour boat will
be leased, rather than purchased outright. Since
there is no land ownership in the national park,
the companys assets consist of boats, goodwill,
and the value of a long-term lease.
The three Mackies are the only permanent
workers, but the summer season requires about
20 additional employees. Some are all-year
residents of Banff who work at ski resorts in the
winter, and others are summer-help only. Up to
eight of these staff stay in the lakeside house.
A key seasonal employee is the operations
manager. He is a vital part of the business and
might eventually become a partner, with Diane,
in its ownership.
Ian is President of Minnewanka Tours and
makes the major decisions. He had to work over
a period of years to secure the latest lease from
Parks Canada, and was greatly relieved to get it
in place.
Brenda does the company books, andwhile
she used to run the snack bar she now only
assists Diane in that task. Together with Ian
they have an annual schedule of trade shows to
attend for marketing purposes.
Diane, as Manager, is taking an ever-
increasing role in the business with a view to
becoming senior partner when Ian and Brenda
retire. Although already familiar with most of the
operations at the lake, she is now learning all
the other aspects of the business.
They have been very lucky with staff. In
addition to employing nieces and nephews, they
get a lot of repeat seasonal workers. Being out of
town actually helps, as it attracts a different kind
of employee. They tend to be young (20s and
167
30s for the more responsible positions like boat
operation) or local school children.
The early years of running Minnewanka
Tours were difficult for IanandBrenda, requiring
a great deal of work but with inadequate finan-
cial returns. Brenda recalls that the summer
workdays were very long, but did not seem
tough. Both of them worked elsewhere in Banff
in the off-season to generate sufficient income.
For all three Mackies work is seldom if
ever left behind. Having an office at home is
convenient, but also further cements the home
work union: Its an integral part of everything
you do. Although specific roles are played
by each of the three Mackies, flexibility is
also important. For example, Brenda and
Diane work together tooperate the snack shop.
They have informal business meetings and
work together on a daily basis to get things
done; sometimes they go to lunch together and
discuss business. Within this family opinions get
expressed freely as issues are discussed and
resolved.
There is a great deal of customer contact in
this business, witha highlevel of personal service
required, but much of this is enjoyable. As well,
this business does not bring customers to the
owners home, even if work responsibilities are
always present.
Business dimensions
Rather than undertaking physical expansion,
the company has been active in improving the
quality of its equipment and service. Boats get
refitted and replaced, and all equipment is kept
up-to-date. Increasing numbers of tourists, in
line with growing visitation to Banff National
Park in general, has put pressure on the
provision of service, but has also generated
more revenue.
For the 4 years prior to 2000 the Mackies
hadbeen without a lease, owing mainly todelays
by Parks Canada. While the parks people were
not worried about renewal, this gap meant that
the business could not be developed without
undue risk, and banks would not lend them
money for developments. Following signing of a
new, long-term lease, a certain amount of work
can now be done. This includes completely new
docks at the lake, replacement of several fishing
boats they had sold (to get back to the comple-
ment of 21), and possibly purchasing a brand
new, fourth tour boat to expand the capacity of
that popular service.
In 1999 the Mackies also leased additional
office space above their current location in
Banff, in preparation for hiring new staff. Their
main need is for a full-time marketing and sales
professional. That person could replace Ian and
Brenda in some ways, thereby easing their work
(for example attending off-season trade shows),
plus do a better marketing job then is currently
possible. A part-time accountant is also being
considered.
Absolute seasonality marks this business, as
it cannot run in the cold months nor outside the
5-month lease period. During the off-season a
lot of marketing and paper-work has to be done.
Ian and Brenda have travelled a lot to trade
shows and this allows the combining of work
with pleasure. However, the travel can also be
wearying.
Although an all-year operation would
have its benefits, the option of adding a winter
operation has been rejected. Opportunities for
acquisitions in other locations have also been
rejected over the years, as they would have
generated a lot of additional travel and responsi-
bility. Ian feels that adding a winter business
would have been overpowering. He preferred
to stay focused and do things right.
Brenda and Ian will not retire in the immediate
future, but are grooming Diane to assume more
responsibility and eventually become senior
partner in owning and operating the business
along with the operations manager. This is a
type of family inheritance, and although the
legal and financial details have not been worked
out, it appears to be a practical solution. Diane
will get support from the senior Mackies for a
number of years to come and will ultimately
have an experienced operations manager and
new permanent staff.
The option of selling the business was
considered, but the Mackies wanted a family
connection with Minnewanka Tours to continue.
150 Chapter 9
168
Selling would generate more cash immediately,
but the process of transferring ownership to
the new partnership will also generate income
for them, albeit spread out over time. Their
ambition has never been to get rich.
Case 9.3 reguiderna
Background
Founder Ole (pronounced Ow-la) Kristianson
was trained as a car mechanic and ended up
working on the ski lifts while at school. He got
into guiding as a sideline, hardly charging
anything for his services. He has also worked in
the local hospital and at the campsite in re
(pronounced Or-a). Over the past 15 years,
since 1985, Ole Kristianson has developed the
leading guide service in Swedens mountain
resort of re. His motto is adventure and
harmony, but now he is planning to sell out
and move on to another, more personally
harmonious, line of work. He is a self-described
entrepreneur, now a professional, but once part
of a group of three young, naive guys who
set up a fun business. What changed? Is this a
success story?
Family dimensions
reguiderna is a sole proprietor company, but
there has been family involvement. Oles father,
nowaged 86 and retired, has been a permanent
but unpaid fixture at their camps and is
much loved by the clients. He is a character
who seems to provide cultural authenticity
to the experiences, while performing necessary
services. Oles mother has provided baking for
the camps. Ole is not married, but his partner,
a graduate student, likes to contribute to the
business. He does not want her to sacrifice her
studies for this paid, part-time work.
On family involvement, Ole has several
opinions. His family has had a big involvement
in the growth of the business, always discussing
things and helping out. Gradually his father
came to see it as a legitimate and successful
business. On the negative side, Ole proclaims
that it is difficult tobe a boss tofamily members.
As owner and manager of the business,
his personal life became integrated with the
business; work was always being brought home
with him. In this past year Ole has drawn a firm
line between work and home, particularly to
ensure that he spent weekends with family. If
he worked all the time, which was his normal
operating procedure, his staff would also feel
obliged to do so.
Business dimensions
For the first two years reguiderna provided
guide services to private clients for hiking and to
bus tours for sightseeing. They could not afford
to pay any staff, and Oles father kept remind-
ing him to get a real job. A hotel came to them
and asked if they could produce camps and
meals for a canoe trip, and this became their
first function (arrangement). The range of
activities they guided expanded (see their
website, in Swedish only: www.areguiderna.se)
and in particular they added snowmobile safaris
using purchased vehicles initially, but later
with 20 leased vehicles.
A few years ago reguiderna arranged and
sold tourist packages to the area, but this service
was made redundant when the major ski-lift and
hotel company in the resort began its own pack-
aging and booking business. Now reguiderna
mostly serves groups tied to meetings and
conventions, both as guides and producers of
functions. They can mobilize up to 200 local
people when necessary to serve a large event.
Outdoor adventure is a seasonal business,
but there are opportunities all year round.
Winter predominates, with guided ski and
snowmobile safaris, and the summer season
has actually been in decline.
His customers are mostly Swedes, who as a
nation prefer to go fishing and hunting on their
own, but will gladly employ a guide service for
winter mountain adventures aimed at corpora-
tions and other groups. Other clients include
English, Russians and some Norwegians. Indi-
vidual clients come to re first, and then look for
activities, while group business is generally tied
to pre-arranged meetings and conventions.
The company does not employ full-time
staff, but there are regulars who guide on a
169
part-time basis. They are all males bar one,
as physical strength has been a major criterion
for driving snowmobiles. The snowmobile
mechanic and office administrators work
the longest season, from September to May.
Numerous occasional workers are employed
when needed at functions.
reguiderna is the dominant guide service,
but there is competition. Ole says that fun
businesses like this attract people for the
lifestyle, but they tend to burn out or fail after a
few years. Why has he been successful? The
number one reason has to be hard work and
increasing professionalism, evolving from fun to
sound business practices.
Ole says that relationship-building has been
a critical success factor, particularly as in a small
resort town everyone gets to know everyone
else. His office is located in a hotel and he shares
space with several crucial contact bodies, includ-
ing the on-hill restaurant management, apart-
ment leasing agency and conference booking.
He works closely with hotels, the main reserva-
tion system and ski-lift company.
For marketing, reguiderna relies on the
many contacts that generate group business and
referrals, and on their own website. A network of
people sell his product on commission. They
once had a sales office in Stockholm, but it was
not as effective as it should have been to justify
the cost.
The original three-way partnership was built
out of friendship, not contracts. Over the years
Ole became the one to spend the most time
and effort on the business. It evolved into a
shareholding company with a board of directors
and a hired managing director, and eventually
he bought back all the shares to take complete
ownership and managerial control.
Ole maintains he always had an exit plan.
Currently he is negotiating with two potential
buyers who would acquire very little in the way
of tangible assets. They can buy the company
name, three wilderness camps, some equip-
ment, goodwill with many contacts, and Oles
advice. He wouldstay on as a paid consultant for
a year or more.
A new company is in place and ready for
his commitment. He will remain in re and run
a one-man firm, with emphasis on harmony
through team building. Perhaps his work can
become international, but Ole is tired of manag-
ing employees and has slowed from a run to
a walk. He makes it sound like burnout, but
perhaps what this entrepreneur really craves is
a new challenge.
Chapter Summary
These cases studies demonstrate that an
additional dimension of creativity, enterprise
and enthusiasm is evident in family-owned/
-operated tour companies. The focus on provid-
ing the customer with a unique and enjoyable
experience is also a common desire in these
businesses and there is a high level of interac-
tion between customers and family members. In
two of the cases (9.1 and 9.3) the strength of
character of the tour leader becomes a feature
of the business, which is also one of the busi-
nesses major assets and points of difference
from other non-family firms in tourism. All
three businesses case-studied have plans for
expansion in their programmes and (in
case 9.2) for the people they employ, which
again differentiates them from so many other
tourism businesses that are locked in to existing
infrastructure and capacity.
152 Chapter 9
170
10
Family-owned Tourist Attractions and Wineries
Introduction
The three businesses in this chapter occupy
an important position in the tourism industry
that of attractions. Like many tourist attractions
though, they began operations not as tourist
attractions, but in another industry altogether.
These businesses would be what Leiper (1997)
referred to as on the fringe of the tourism
industry. Case 10.1, Pelham Family Estate
Winery was established to produce quality wine
but eventually became a tourist attraction as
the appeal of wine and the Niagara region of
Ontario grew, especially in the populace cities
of south-eastern Canada and north-eastern
USA. Case 10.2, Rivendell Gardens was origi-
nally intended as a working farm and market
garden providing fresh produce to local buyers,
and pickling and preserving any surplus. Case
10.3, Billabong Sanctuary took many years to
establish as much for conservation of Australias
unique and endangered wildlife as for tourism.
These three cases illustrate how the owners
have made the transformation from the fringe
of tourism to become industrialized tourism
attractions (Leiper, 1997).
Case 10.1 Pelham Family Estate Winery
Background
Henry of Pelham Family Estate Winery is
a small premium estate winery located on
the Niagara Bench, Ontario, Canada. Owned
and operated by the Speck family since
1988, the land now planted with grapevines
was first deeded to their great-, great-,
great-grandfather in 1794. With the pre-
mise that fine wine is grown and not made,
they take low yields and tend the 225-acre
estate vineyards with meticulous care. Their
dedication to high quality in viticulture and
oenology has been rewarded with over 50
international awards (www.henryofpelham.
com). The winery offers a tasting bar and
cellar store and in 2002 the Coach House
Caf adjacent to the cellar door sales room.
Winery tours, picnic areas, art exhibitions and
events are part of the winery experience and
an annual Shakespearean performance is
popular amongst visitors from Toronto. They
also opened two historic walking trails around
the property close to the Short Hills Park and
the Bruce trail which run along the Niagara
bench.
The early association of Henry Smith
(who used the pseudonym Henry of Pelham
after the English Lord) is a unique and his-
torical point of difference for this business.
The real story of the family history is played
out in the branding of the wines and on all of
the marketing collateral including the web site
(www.henryofpelham. com). The message is
that the land and business is owned by
the family, the wine is made and delivered
by the family and that it is a true family
business.
171
Family dimensions
It was the founder, Mr Paul Speck Seniors
decision to establish the vineyard as a family
business, after initially buying back the land
once owned by his forefathers. His vision was to
create a small winery prior to retirement from a
career that predominantly involved the running
of a private school in Toronto, Ontario. Part-
way into the project Mr Speck became ill, and it
fell upon the eldest son, Paul to take over the
running of the vineyard, while the middle son,
Matthew took on the role of maintaining the
original 55 acres of vines that the family had
planted. Paul was going to attend Law School
but then took a year off to help establish the
vineyard. Eventually the youngest son, Daniel,
became involved in the business as well, at a
time when wine in Ontario was just beginning
to make a name for itself within Canada. The
decision to establish the business then was a
unilateral one by Mr Speck and the circum-
stances dictated that the rest of the family would
become involved. Out of this crisis of the loss of
the founder came a closer association between
the brothers, who rallied together to make the
business turn the corner and break-even.
Having made the commitment to the busi-
ness, the reputationand quality of the wines con-
tinuedtogrow, as didPauls level of involvement
in the industry. In May 1999, Paul was named
chairman of the Wine Council of Ontario. Henry
of Pelham is a founding member (Paul is Vice
Chair) of the Vintners Quality Alliance (VQA), a
government-sanctioned regulatory system that
ensures the quality of Canadian wines that carry
the distinctive VQA label.
There are three brothers in the business
Paul, Daniel and Mathew Speck. Paul (aged 36)
is President, Mathew (aged 33) is Vice President
and Viticulturist and Daniel (aged 28) is Vice
President and Director of Sales. All three are
university educated (Philosophy Major) and all
are married. Paul has children aged 5 and 2 and
Mathew has a baby boy. The business employs
an estimated 30 full-time staff and ten part-time
staff inits vineyard andtasting roomandthey are
opening a small kitchen and takeaway facility
in the near future. Currently the tasting room
receives about 50,000 visitors per year, mostly
from the Golden Horseshoe area around Lake
Ontario and the Greater Toronto Area, a market
area of 6 million Canadians. The wine tourism
season begins in June and runs through to
December of each year. Even though the winery
is less than an hours drive from the US border,
they do not draw a lot of US visitors, although
there has been significant new interest.
Business dimensions
Paul believes that all family businesses are
entrepreneurial by nature, and take risks to
achieve their goals. This is true for start-up busi-
nesses, when growth is important, but depends
on the generation of business owners; more
established (second and third generation) busi-
nesses might not need to take as many risks
as start-up businesses. It may also be true that
risk-taking becomes less necessary over the life
of the business.
For example, it was necessary to borrow
from merchant banks in the earliest stages of
the business during development, but as the
business became more established more con-
ventional forms of business financing were put
in place. This had the effect of returning more
financial control to the owners, and providing a
greater degree of freedom over the operation
of the business. When asked about his entre-
preneurial skills, Paul suggested it came fromhis
father, who ran a private school and invested
in Toronto real estate before taking on the
challenge of making fine wine. Unfortunately
Mr Speck passed away in 1993, but his
entrepreneurial spirit lives on through his sons.
Following the difficulties and uncertainty
of the early establishment years, Paul decided
to place the business on a more formal footing.
The roles and responsibilities of the family mem-
bers were clearly defined and quarterly board
meetings were used to monitor business perfor-
mance. Formalized structures for employees on
employment contracts and job structures were
also put in place during the early 1990s.
Paul also worked hard on developing good
relationships with his financiers and accountants
and set up a business plan and cash flow
statements that turned turmoil to profit for the
business. While there was no formal marketing
plan, a series of specific drives to target the high-
quality end of the wine market were developed,
154 Chapter 10
172
A4751 - Getz - 172.prn
and continue to develop with each vintage
and new planting of Vinifera planted. Currently
Pelham offers a wide range of wines and styles,
including white wines (Chardonnay, Riesling,
Sauvignon Blanc and Gewrztraminer); sweet
wines (Vidal Late Harvest, Riesling Late Harvest,
Riesling Botrytis and Riesling Ice wine); red
wines (Baco Noir, Gamay, Gamay-Zweigelt,
Cabernet-Baco, Cabernet Merlot, Merlot and
Pinot Noir); ros (Pinot-Zweigelt) and sparkling
wines (made fromChardonnay andPinot Noir).
Growth is very customer-driven, with
plantings matching what the owners anticipate
that the wine market will demand, not what the
industry chooses to supply. The Baco variety is
a perfect example of a wine that is in demand,
but for some reason is in limited supply in the
Niagara region as growers give preference to
other red varietals. The diverse range of wines
alsoreflects that inchoate nature of the Canadian
wine markets, with tastes and preferences
continuing to develop over time.
In fact, Paul indicated that the customer
focus enabled the business to overcome the lack
of experience in the wine industry. An interesting
feature of this business is that none of the owners
have hadany formal training in the positions that
they hold in management, marketing and sales
or viticulture.
Like many family businesses, especially those
with young owners, there is no succession or
disposition plan, nor do any of the owners
have plans for retirement as they are still enjoy-
ing the business and family life in Niagara.
None of the spouses are involved in the
business, thereby avoiding any potential
conflicts between family and business concerns.
Ideally, Paul would like to see the business
continue as a fully independent operational
winery, which is viable, profitable and ongoing.
The independence to make decisions about the
future directions of the winery is most impor-
tant, so selling or taking an equity partner is
not an option. As long as the family enjoys the
challenges, takes pride in their success and
receives a reasonable return it will remain a
family-owned and -operated winery.
The business has grown with the region and
benefited fromthe decision to set the structure in
place as soon as possible after Paul took over. It
remains a medium-sized player in the Niagara
wine region, but a miniscule player in the global
wine trade, with exports limited to other Cana-
dian provinces, the USA and Asia. The business
will continue to overcome the challenges and
uncertainty that have characterized its establish-
ment and growth period, in the same way that
the vines overcome the winter assault and sum-
mer heat in order to produce simply fine wines.
Case 10.2 Rivendell Gardens
Background
Established by Lu and Peter Standish in 1983
and first opened to the public in 1985, Rivendell
Gardens in the Margaret River wine region of
Western Australia was originally a vegetable
growing operation, turning any surplus into
preserves for sale locally. Now Rivendell Wines
offers a range of services for tourists, including
accommodation, winery, bistro, gallery, attrac-
tive gardens and a wide range of preserves
made from local produce.
Rivendell produced its first wine in 1990
and now offers a range of whites (made from
varietals and blends of Semillon and Sauvignon
Blanc) and reds (made from Shiraz, Cabernets,
Merlot and some specialized Portuguese variet-
ies). Fruit is sourced from the farm and local
vineyards with Lu and Peters son Mark over-
seeing the fruit production. The local theme
extends to the use of local pottery in the bistro
as well as a range of paintings and ceramics
by local artists. Brandywine Lodge, a two-storey,
bushpole, jarrah-clad house set in the bushland
overlooking the vineyard, offers a unique style
of accommodation catering with ease for
large family groups for special celebrations or
reunions. Many craft groups, mixed-generation
holiday makers and stressed executives have
taken advantage of its tranquil setting.
Rivendell has evolved into a well-
established and diversified family business
incorporating a bistro (currently leased to a local
family), wine tastings, wine sales and home-
made preserves, wine-making consulting ser-
vice, extensive cottage gardens, and a unique
Family-owned Tourist Attractions and Wineries 155
173
accommodationfacility. Tourismis an important
part of the business activities with cellar door
sales (wines and preserves), accommodation
revenue and the bistro lease contributing more
than 80% of business turnover. The tourism
market is mainly individual families, but smaller
coach groups are also welcomed.
Family dimensions
Lu and Peter Standish named the business
Rivendell (after the haven for weary travellers in
J.R.R. Tolkiens epic The Lord of the Rings) and
began to develop a business based on sales of
local produce to tourists in the rapidly expand-
ing South West region of WA. The vineyard was
started in the late 1980s, in conjunction with an
investment syndicate. It was small in size (30
hectares), with the land being provided by Lu
and Peter and the development capital pro-
vided by the investors. Unfortunately, financial
problems led to several of the investors choos-
ing not to continue, so the vineyard was sold
only 3 years later. Mark had been studying
at agricultural college and had begun to take
an interest in the vineyard. Mark leased the
vineyard back from the new owners for several
years and was able to develop his skills to such
an extent that he could offer wine-making
services to nearby small vineyards.
Their daughter-in-law, Wendy has gained
hands-on knowledge, firstly as an employee and
then (after marriage to Mark and the formation
of the newfamily company) as Company Secre-
tary since 1999 of Rivendell Wines Pty Ltd.
Another son, Tony, is a shareholder in the com-
pany, but is a sleeping partner as he pursues
his teaching career, whilst their eldest son and
university professor, Russell, lives in Sydney
with his family but visits Rivendell on holidays
whenever possible.
Business dimensions
Lu and Peter had some common goals in estab-
lishing Rivendell and used their accumulated
knowledge and interests to start up the business.
Peter had originally intended to run sheep on
the property that they had just purchased in
the South West, but Lu was always a people
person and recognized that tourism would be
an opportunity to live on the property while
generating extra income. After considering the
establishment of various forms of accommoda-
tion (including a caravan park, chalets and/or
horse riding camps), they eventually went into
partnership with another family who began to
build the Lodge as their private residence.
Meanwhile, Peter had established a successful
market garden and sold produce directly from
the farm to local buyers. Any surplus was made
into chutneys, sauces and jams. This was the
start of the home-made preserve business that
carries the Rivendell label today. As production
increased, a packing shed and farm stall were
built on the property and visitors and tourists
were welcomed to buy the range of produce
and view the gardens. In 1990 their business
partners assumed the role of making all of the
preserves while Peter tended the garden and Lu
managed the farm produce sales. Lateral think-
ing led to the garden produce diversifying into
gourmet vegetables, which were sold through
a growers market in an affluent suburb of
Perth. Eventually, in 1995, the partners moved
away to a property of their own, and their home
was renovated to become Brandywine Lodge.
Lu and Peter have always sought to avoid
high borrowings, although their first vineyard
was funded that way. Retaining equity and con-
trol of Rivendells assets is an objective of the
business. Other capital-raising options, such as
sub-dividing and selling off some of the land,
have occurred, but Shire restrictions prevent any
further option to do this. Plans for growing the
business required considerable input of capital,
as the business had been undercapitalized
during the first fewyears of operation. Instead of
raising funds from the public, Lu and Peter
approached other family members to invest their
time and funds into the business.
In establishing a vineyard, a considerable
amount of capital was required and in this
case it was raised through equity financing.
This financial arrangement was tax effective
for investors, who controlled about 50% of the
156 Chapter 10
174
vineyard operation. The vineyard was not
expected to realize a profit for the first 7 years of
operation, and losses could be offset against the
other income of investors. However, the sharing
of financial control of the vineyard operation
proved to be problematic and, after a few years,
the vineyard was sold to appease the investors.
Rivendell has been Lu and Peters vision
and they have pursued it with a passion since the
early 1980s. During that time there have been a
number of partnerships, with family members
and non-family partners, lease arrangements
and equity funding that provided the much-
needed capital. However, this also limited the
control that Lu and Peter had to protect the
integrity of the business and the quality of
the food, wine and preserves, which is associ-
ated with the name Rivendell. Retaining control
within the family has come at a high cost (both in
financial and emotional terms) and problems
have emerged with trying to mix business with
both friends and family.
When they were building the family busi-
ness, there were not a lot of family meetings or
involvement in decision making. In this regard,
the business was perhaps not very business-
like. When Mark and Wendy began their own
family, it became necessary for the business to
expand in order to support two families Lu and
Peter (in semi-retirement) and Mark and Wendy
(plus their children). This raised the problem of
capitalization and howbest to fund the on-going
operations and expansion. Past experiences in
raising funds through equity had left the families
wary of this form of borrowing. Most of the
existing capital in the business was tied up in the
land values, but further subdivision and land
sales were not an optiondue tolocal government
zoning restrictions.
This issue is further complicated by the
expectation that all family members will ulti-
mately inherit a proportion of the proceeds from
the sale of the land. Wendy and Mark may con-
sider that they are entitled to a larger share of the
proceeds, due to the work and capital they have
put in, compared with the other two sons Tony
and Russell. Tony has had a financial involve-
ment in the business, while Russell has had no
involvement at all. Lu and Peter desire to keep
the business inthe family for as long as possible.
Despite being a well-established tourism
business in the thriving Margaret River wine
region, Rivendell also shares some of the com-
mon issues that face all family businesses in rural
areas. Principal among these is the fact that
much of the capital value of the business is
locked up in the land, and it is this capital that
provides the key to growing the business. The
high value of the land is also a source of some
family tension and it seems that each family
member holds his or her own viewas to howbest
to manage that asset. Their involvement raises
the second issue that confronts all family busi-
nesses, that is, howtogrowthe business toa level
where it will support a growing family while
not surrendering family control. Lu and Peter
are now semi-retired and have reduced their
involvement in the day-to-day running of the
business. The bistro has been leased out to a
local family, andLuis fulfillinga long-helddream
of completing a university degree by external
studies.
Finally, Mark and Wendy have indicated
that they would like to be released from their
commitment to the business to be in a position to
spend more time with their children, as well
as run a business in their own right. As all of the
capital is tied up in the land, there are no cash
reserves to buy out Mark and Wendys share in
the business. On top of this, Lu and Peter feel
that they no longer have the energy to run the
business by themselves. Thus, the decision has
been made to sell the property and the business.
After payment of all outstanding liabilities, Mark
and Wendy should be able to walk away with a
modest amount to enable them to start their
own business and Tony will have his original
investment returned. Lu and Peter will then
invest their capital in a variety of options, so that
they may hopefully retire on the interest, with the
three boys inheriting equally in their estate when
the time comes.
Case 10.3 Billabong Sanctuary
Background
Billabong Sanctuary (Billabong) near Towns-
ville, Queensland, was established in 1981
and opened to the public in 1983. Like
Rivendell Wines Pty Ltd, the business started
as a partnership with another couple but the
175
owners Bob and Adel Flemming assumed full
ownership of the business in 1995. Their son
Brett has recently joined the business and it also
employs two indigenous people (descendants
of traditional owners of the land where
Billabong is located) and four non-aboriginal
employees.
Visitors to this Australian native animal
sanctuary average 130 per day or about
300,000 a year. As an outdoor tourist facility,
visitor flows are weather dependent. Visitor
origins are approximately 60% from overseas,
20% from Queensland and 20% from other
Australian states. For example, a breakdown of
visitor surveys conducted in AugustSeptember
2000 provides an indication of visitor origins
(Table 10.1).
Note that the year 2000 was a low visitor
number year due to global economic conditions
in international markets. The domestic Austra-
lian tourism flows are somewhat seasonal with
the busiest times being school holidays in the
months of July, August, September and Octo-
ber. Visitor flows from Europe are constant all
year roundandthe German andother European
markets are very important to Billabong. Other
important markets include school groups, which
provide about 4000 students per year. More
recently Billabong has developed packages for
the conference market such as breakfasts at the
billabong or evening cocktails with a crocodile,
which can cater for an average of 100, but can
accommodate up to 500 guests, and can include
aboriginal dancing and night tours.
Other packages available include Club
Billabong, a membership scheme that provides
for free entry to Billabong annually, and
packages all 4 fun, which provide for savings
on entry to four tourist attractions in Townsville,
including Billabong. Bob also offers educational
programmes, such as the people to people
programme that brings students out from the
USA each year. Bob places high value in visitor
education and believes that this is the key to
offering a positive ecotourism experience.
Family dimensions
Bobs personal goals were set during his
teaching career, when after 15 years he reached
Deputy Principal at a school in Newport,
Sydney. However, Bob wanted a career change
and made the decision to go independent and
leave Newport. His wife, Adel was willing to go
with the flow. During his teaching career, Bob
developed a strong commitment to the environ-
ment and conservation and incorporated these
themes into his teaching.
Originally, Bob and Adel were looking at
established business and considered a business
in Cairns, now running as Wildworld. After the
real estate deal did not go ahead, they decided to
establish a business in Townsville, the regional
centre of NorthQueensland. They took 6months
to find land (25 acres/10 ha) with good water
and correct zoning, approximately 20 km south
of Townsville. The business took 2years toestab-
lish and Bob wrote environmental educational
units for the Queensland Education Department
on a consultancy basis to generate an income
during that period. Bob continues in this educa-
tional role andoffers tourismtraining through the
Queensland Department of State Development
aimed at increasing profitability of tourism busi-
nesses. Bob runs training sessions on the use of
information technology and website develop-
ment, and the Billabong website provides a good
example of the educational theme of Billabong
(www.billabongsanctuary.com.au).
After opening in 1983 the first years were
tough, with low cash flow. However, they were
lucky with acquiring animals for the sanctuary
because they could take all of those illegally
collected animals that Queensland National
Parks did not want. Bob has now established
an extensive sanctuary with displays of many
of Australias wild fauna, including feeding of
158 Chapter 10
Visitor origin
Proportion of all visits in
August/September 2000 (%)
Other Australia
Other QLD
Townsville
Germany
Other Europe
UK
New Zealand
USA and Canada
24
10
8
17
17
12
7
5
Source: James Cook University tourism students.
Table 10.1. Billabong Sanctuary visitor origins.
176
crocodiles and a breeding programme of the
endangered bird, the southern cassowary. True
to the name of the business, it does provide a
sanctuary and habitat for free-ranging water-
birds and reptiles. Bob manages the business
part-time and Adel manages the accounts and
finances, alsoon a part-time basis (2 days/week).
They employ a manager full-time, which allows
them time away from the business together.
Their son Brett commenced working at
Billabong in November 2002 as Sales and
Marketing Manager.
Business dimensions
After almost 20 years, Bob and Adel still enjoy
the business and will stay in business until they
are aged 70 years plus (Bob is now 55 and Adel
is 53). Bob has a strong focus on recruiting
and training the right staff and has appointed a
Manager, Chris, who runs the business when
Bob and Adel take time off. Unlike many family
businesses this enables Bob and Adel to take an
annual holiday 1 month a year and Bob
cites this as the main reason for being able to
stay in business for so long. In terms of recruit-
ment of staff, Bob and Adel are highly selective
and only appoint outstanding applicants. In
their view, it is the staff at Billabong Sanctuary
that make the business successful. The regional
university, James Cook University (JCU), is a
good source of staff and all staff at Billabong
from there have a degree in zoology. Bob does
not employ unqualified animal people and
prefers staff to have a higher level of education.
In terms of retaining staff in the very competitive
wildlife business where workers are mostly
nomadic, Bob has introduced a number of
innovations. Firstly, a 4-day week for staff has
been in place for a number of years, making
employment at Billabong more attractive. Sec-
ondly, Bob is inclusive of all staff in all aspects of
running the business and especially values their
input when establishing new displays. The staff
at Billabong are very hands-on and seem to
enjoy imparting their knowledge of Australias
wild animals to visitors through interactive
sessions programmed throughout the day (see
the website for feeding and other interactive
programmes). Highly skilled and motivated staff
are offered a career path to management or
curator level within the business.
Bob has plans to increase awareness of the
region and has applied for a regional tourism
grant to entice visitors to explore the region
around Townsville. Within Billabong, Bob plans
to establish a new rainforest display and wants
to keep growing the business and introducing
something new for tourists to enjoy and to keep
locals interested. Bob has excellent relations with
the local media, which often contact him for
stories about new developments. Bob taps into
the visiting friends and relatives market through
a Billabong Privilege card provided to locals,
which provides one free local entry for every two
visitors they bring to Billabong.
Bob wants to continue to target the
European market, mostly high-spending back-
packers and the self-drive market. Bob markets
Billabong as Australias best interactive wildlife
park and recognizes the value of favourable
word-of-mouth promotion. The main source of
information about Billabong is friends, relatives,
residents of Townsville and other word-of-
mouth, which was cited by 35% of the visitors
in the 2000 survey. Another indication of the
favourable reputation of Billabong is the propor-
tion of repeat visitors, which was the second
largest group in the 2000 survey.
Bob also owns land on Magnetic Island
(offshore fromTownsville) and plans to establish
an ecotourism business with accommodation at
some time in the future. He may target wealthy
European backpackers who have the money
to spend on up-market accommodation in a
unique location.
As previously stated, Bob and Adel intend to
stay on running Billabong for another 20 years
(at least) and Bob holds the view that if you
retire you die. They do have a son aged 22
who grew up at Billabong (a fascinating child-
hood if ever there was one). He holds a degree
in Hotel Management and was employed as a
Purser on the Coral Princess, a 40-passenger
cruise ship operating between Townsville and
Cairns. Having shown no previous interest
in joining the business, Brett is now involved
177
in building the conventions market for the
business as well as increasing the European
segment and special interest-group market.
However, there are no plans for him to take
over the business at the moment.
A key theme of this business is education
probably as a result of Bobs background and
experience in teaching, Bob believes that visitor
education must be entertaining but must also
involve interaction with the wildlife. Bob encour-
ages hand-feeding of animals by visitors and
does not charge for having photos taken with
animals such as koalas (other Australia wildlife
attractions charge for this facility). Bob has no
problem balancing conservation with increasing
tourismnumbers andsays that the site copes well
with as many as 350 visitors on site at any one
time.
In terms of personal goals, independence
and the desire to leave teaching were the
main reasons that Bob and Adel established
Billabong. Bobs personal conservation and
environmental interests were also important. No
specific business goals were identified; however,
Billabong appears to be a successful business
and has won numerous local, regional and state
tourism awards. Bobs goals for developing the
business are shared with his partner Adel and
staff, who are a valuable part of the business.
Visitor education is also an important part
of the business and this occurs through the
skills and efforts of the staff, who are all qualified
zoologists. Billabong has a well-establishedrepu-
tation as a wildlife attraction and has targeted
the European market (mainly Germans) on
self-drive tours. Billabong produces a German
version of the brochure and the latest promo-
tional brochure features mainly European-
looking people interacting with wildlife.
Billabong has excellent road signage on the
main highways from the north and south,
and highway billboards were the second largest
single source of information about Billabong in
the 2000 survey (16%). Billabong also values
the local market and encourages local visitation
through Club Billabong membership, Billabong
Privilege cards and keeping the local
media informed of new developments and
achievements.
Bob and Adel have no plans for disposition
and in any case their son is now interested in
working in the business. They plan to continue
running the business for another 20 years and
have put the management and staff in place to
enable this to occur.
Chapter Summary
These three cases all faced different challenges
in very different environments in making the
transition from their primary or core business
to a point where they are now achieving success
in more than one field of endeavour. In cases
10.1 and 10.2, success in wine and food pro-
duction has underpinned the development of
tourism products and services. In case 10.3, the
founders primary concern for conserving the
habitat of Australian fauna and flora has been
achieved and that has enabled them to deliver
environmental education in an authentic and
meaningful setting for tourists. In all cases, tour-
ism was always considered as a strategic direc-
tion for the business, if only in the minds of the
founders, but their ability to devise a means of
strategically targeting and attracting tourists to
their businesses has eventually paid dividends
(after a decade or more) and now generates
a substantial proportion of business turnover.
The investment decisions and ownership
issues confronted were difficult and the lessons
learned from partnerships and equity financing
are salient for any family business, particularly
wineries that intend to move into the tourism
industry.
Reference
160 Chapter 10
178
11
Cross-case Analysis
Introduction
Cross-case analysis is a means of grouping
together common responses to interviews
as well as analysing different perspectives on
central issues (Patton, 1990; Carlsen and Getz,
2001). Cross-case analysis begins with writing a
case for each unit studied (each family business)
then grouping responses together according to
questions, themes or central issues. In this
way the issues that emerge in the case studies
are integrated within the descriptive analytical
framework that provides the basis for compari-
son and contrast. The themes for this cross-case
analysis are those that have been used in the
theoretical and case study sections of this book
based on Gersick et al. (1997) family, business
and ownership. Previous chapters illustrate
how these three themes or dimensions of family
business research not only represent the most
important aspects but also fit well with the
structure and approach used in the 15 cases
presented in Chapters 610. There are other
approaches to conducting cross-case analysis
based on the historical development of the
business the chronological approach. That
is, case studies present the issues over time,
describing the family business from conception
through establishment and development and
ultimate plans for disposition. Other strategies
for analysing case studies focus on key events
or decision points, business settings and envi-
ronment, social/psychological processes or
business strategies. While all of these have
some relevance to the current cases studied, the
thematic approach to cross-case analysis
provided the optimum means of grouping
together common issues for the family
businesses studied.
Interviews leading to the preparation of
case studies were conducted between 1999 and
2002. Questions covered basic business infor-
mation including ownership, the roles of family
members involved in the business, number of
staff, business operations, when the business
was established or acquired, financial turnover,
and the education level and previous business
experience of owners. The interviews focusedon
broad issues, but specifically addressed these
questions:
What were your personal motives or goals

when starting up (or purchasing) this
business?
Did all family members share these goals?
Were there other reasons for commencing

in business?
How was the decision to commence the

business made?
What was your role in the business?
What is your personal involvement in

the business?
Have you any plans to develop the

business?
What do you want to see happen to the

business?
Will you sell the business or will it stay in

the family?
What do you prefer to do with the business

in the future?
179
Interviews were conducted with individual
family members at a time and location conve-
nient for respondents, mostly at the place of
business or family home. While every effort
was made to involve as many family members
as possible in the case study interviews, the
cross-case analysis pertains mainly to issues for
founders and owners, not those of other family
members working in the business.
The businesses selected for study are
not necessarily representative of all family
businesses in tourism, but are based on a conve-
nience sample from the geographical region of
the researchers. They were selected on the basis
of personal contacts, and in some cases with
a minimum of advance knowledge about the
nature of ownership and family involvement.
It was intended to interview only businesses
with children or other family members directly
involved in order that they fit the definition of
a family business. The cases selected for this
analysis consisted of accommodation providers,
tourist attractions and tour operators. Some of
these businesses incorporate more than one type
of revenue source, with the simplest being cabins
for rent and the most complex consisting of
a campsite, cabins, motel, caf, rental house,
catering, and recreational activities. Direct com-
parison of identical types of businesses was not
possible with such limited coverage. To facilitate
comparisons and demonstrate examples of
cases based on the issues identified, a coding
system which is cross-referenced to the case
studies in Chapters 610 is used as follows:
Case 6.1 Alborak Stables
Case 6.2 Taunton Farm Holiday Park
Case 6.3 Ol MacDonalds
Case 7.1 The Bergstedts
Case 7.2 Cricklewood Hotel
Case 7.3 Millestgrden
Case 8.1 Crystal Creek Rainforest Retreat
Case 8.2 OReillys Rainforest Guesthouse
Case 8.3 River Valley Ventures
Case 9.1 Wild Over Walpole
Case 9.2 Minnewanka Tours
Case 9.3 reguiderna
Case 10.1 Pelham Family Estate Winery
Case 10.2 Rivendell Gardens
Case 10.3 Billabong Sanctuary
Based on the 15 cases cross-analysed as well
as other research findings in the family business
literature it is possible to identify a set of issues
that are salient to all family businesses in tourism
and hospitality. These issues relate to the family,
the business and the ownership dimensions pre-
viously discussed. Within each dimension there
are a number of issues that are common to fam-
ily businesses as well as issues where businesses
digress. It is important to note that whilst most
issues are found to be common, they cannot be
considered as generic to all family businesses in
tourism and hospitality. Nor are they presented
in order of importance in the following sections
of family, business and ownership issues.
Family Issues
Family issues that emerge in the cross-case
analysis are as follows:
A degree of family consensus in
decision making
The decision to establish or purchase a family
business is fundamental as it affects the future of
the family in almost every way possible. This
decision then should rarely be taken unilaterally
(as was the case in 10.1) and all family mem-
bers should be involved in the decision process.
Many factors are taken into consideration when
establishing or developing a family business,
and in most cases family members agree that
lifestyle and location are the most important
factors (cases 6.1, 6.2, 6.3, 7.1, 9.1, 9.3 and
10.2). Whilst consensus is desirable, it is not
essential to have agreement between all family
members when setting up or expanding a
business, as case 6.3 demonstrates.
Shared hobbies, leisure interests and values
within the family
Many tourism businesses were established in
order that the owners could pursue their own
leisure interests and hobbies whilst making a
living for the family an idyllic mix of business
and pleasure. However, in order for that ideal
to be realized, all family members must have
common leisure interests. These interests were
162 Chapter 11
180
many and varied between cases, including
nature and conservation (8.1, 9.1 and 10.3),
snow skiing (9.3), horse riding (6.1) or garden-
ing and viticulture (10.2). These interests and
values have informed the vision of family busi-
nesses, for example in case 6.1, Sandra desired
to run her own horse stables and her parents
shared in that vision and realized that ambition.
For rural-based family business, living in and
raising children in the rural environment was
important in many cases (for example, 6.3). It is
also important that family leisure and business
interests coincide because family holidays are
rare, so the business takes the place of family
leisure pursuits, especially in the first years of
establishment (for example, 8.3).
Some level of support and involvement
of all family members
This is an interesting family issue that illustrates
that support of the family is desirable but
not essential to successful family businesses. In
some cases, involvement of the whole family
in the business was limited due to the other
commitments of some family members to activi-
ties such as farming (6.1, 6.3), education (6.1,
8.1, 10.1) or full-time employment elsewhere
(7.2. 8.1 and 10.3). In other cases, the
copreneurs and the extended family, including
in-laws and children (8.2 and 8.3), committed
to the business. Yet a third type of support was
shown after the business had been established
for a while, when family members chose either
to become more actively involved in some
aspect of the business (8.2 and 10.1) or support
the family business in a financial sense whilst
maintaining a separate occupation, effectively
involved as a silent partner (10.2) or financial
adviser (6.1).
Family involvement in the business
from an early stage
This issue relates more to the benefits of instill-
ing a sense of responsibility and involvement of
family members in the business, as was the case
in 8.2. However, it could equally be argued
that involvement of family members later in the
life of the business can be just as effective in
ensuring good business practices, albeit with a
steeper learning curve for family members not
involved from the start (10.1).
Involvement of all siblings in the business
Involvement of brothers and sisters in the family
business is an issue during all stages of the busi-
ness and has implications for all aspects of the
business, particularly succession. In one case
(8.3) the siblings all became involved in the
business, fulfilling important roles. In case 7.1,
three brothers have all developed cabins on
adjacent parcels of land and are jointly acquir-
ing more land to support their business and
maintain their traditional lifestyle in the moun-
tains of mid-Sweden. Siblings in business are
also evident in cases 8.2 and 10.1 and all have
complementary skills that support the business.
In all cases, the involvement of spouses in the
business is an issue that is carefully considered,
particularly when children are also involved.
When one sibling is involved extensively in the
business, and others have little or nothing to do
with the day-to-day running of it, issues arise as
to the succession plans and inheritance. Are all
siblings entitled to an equal share of the busi-
ness? What if the business is located on a family
farming property? These are pertinent issues
that arise among family members when consid-
ering equity and ownership of family businesses
(for example, 10.2).
A family tradition of
business/entrepreneurship
A family business tradition in running a business
or enterprise is more evident in the case of
accommodation, such as hotels (7.1) or guest
houses (8.2) and is more of an old world con-
cept. None the less, tradition can embedded in
the psyche of the family and form a path that
can be followed as in case 10.1. Tradition also
implies some stock of knowledge, and perhaps
capital that can be drawn upon in running a
family business. The source of the entrepre-
neurial spirit in the family is usually the founder
(10.1) but in one case the desire to start a
Cross-case Analysis 163
181
business was engendered in the founder by her
mother (6.3) and the desire to fulfil the mothers
dream of a better life for her family was a pow-
erful and emotional reason for Jean venturing
into the tourism business.
A commitment to keeping the property under
family ownership in farm-based or family
home-based businesses
Similar to the previous issue, a commitment to
living on the land or maintaining ownership of
traditional family property is desirable for farm/
estate-based business, especially as farming
activities can cross-subsidize the establishment
of tourism activities on-farm (6.1). In many farm-
based family businesses, most family members
felt that keeping the farm in the family and
recognizing that diversification into tourism was
one means of achieving this was evident (6.1,
6.2, 6.3). Likewise, keeping the family property,
in this case an historical guesthouse, was also
important (8.3) to all family members involved
in the business. In case 7.1, the family interest in
tourism extends back over four generations,
and the desire to cater for tourists to mid-
Sweden has remained in the family even
though the original shop and hotel have not.
Flexibility for family members to self-define
roles and responsibilities
Family conflict can arise when roles and respon-
sibilities overlap or workloads are not clearly
defined of shared equally. In all of the case stud-
ies for this book there is no evidence that this
occurred. However, there is also little evidence
that roles and responsibilities were clearly
defined. Instead, family members were encour-
aged to self-define their roles in the business
based on their particular skills, interests and
experience (for example, 10.1). This is perhaps
one luxury afforded to family business owners,
the flexibility to self-define roles and involve-
ment may be important to prevent family dis-
harmony. Most family members were comfort-
able with the shared roles in the business for
example; in case 6.1 everyone helps with
everything in order to get things done. There is
a risk that some family members will be allo-
cated less important and challenging tasks in the
business and will consequently lose interest, so
to counter this everyone should be allocated a
significant role, or responsibilities should be
rotated around family members. One family
business was adamant that if they did employ
their children it would be in real jobs in a paid
capacity (7.3).
Good relations between siblings and
within the family
Open and honest relations between family
members were evident in many of the cases,
both between parents and children in the busi-
ness (6.1, 8.1, 8.3 and 9.1) as well as between
siblings (8.2 and 10.1). That is not to say that
family disharmony does not occur, but that
relationships are such that any conflict can be
resolved through family meetings or informally
through negotiation and understanding.
Family adversity issues
Again, mutual respect and intimacy in a family
setting is a useful precursor for overcoming
the difficult periods that confront every business
from time to time. Some families respond very
well to business pressures by making decisions
together as a family, thereby sharing the burden
of family pressures. Other families are deeply
impacted by family tragedy (6.3 and 7.1), but
somehow have the strength and ability to sup-
port each other while maintaining the business.
Business Issues
Business planning and management skills
Family members that have formal training
in management, including business planning
and management, are a good asset for family
businesses. In many cases it will be the children,
not the founders of the business, who have
received formal business management training,
either through tertiary education programmes
(8.1, 10.2) or informal training through work
164 Chapter 11
182
experience (10.3) and voluntary roles (6.3).
The business networks developed by the
children of founders often bring benefits to the
family business and lead to more formal busi-
ness structures and operations that reflect good
business practice. In one case (10.3) the family
business can play a mentoring role for other
small businesses.
Entrepreneurial issues
The debate about the level of entrepreneurial-
ism in family businesses is ongoing, with exam-
ples of businesses that have succeeded without
the founders engaging overtly in entrepreneur-
ial ventures, but acting in an entrepreneur
guise (6.1, 6.3, 7.3, 8.1, 8.3). Other family
businesses claim that everything they do is
entrepreneurial (10.1) and case 9.3 is another
example of an entrepreneurial individual
starting a tourism business.
The case studies indicate that family busi-
nesses intourismare mostly non-entrepreneurial
and are averse to risk. After all, if the business
venture fails, the family unit is also exposed to
failure so the degree of risk is much greater than
for non-family businesses ventures. However, at
some point in the life of the family businesses,
some are compelled to back their business
judgement and take risks in order to succeed.
It may be that the entrepreneurial family busi-
nesses must have at least one entrepreneur in
the family, someone whodesires a challenge and
feels that they have the skills to succeed (for
example, see case 6.3). The level of experience
and knowledge of the family business entrepre-
neur can be critical to the success of the start-up
family business, and also comes into play when
businesses pursue their expansion plans. It is
important to note that many of the family busi-
nesses case-studied do have expansion ideas
(6.3, 8.1, 8.2, 8.3, 9.1 and 10.1) involving either
an increase in capacity or an augmentation of
their existing products and services.
Financial management
A family member with financial management
skills is invaluable for a business, especially
those that are externally financed. Some level of
training in computerized financial management
is desirable, or at the very least a level of skill in
bookkeeping and accounting practices. Invari-
ably it is the female family members that man-
age the finances of family businesses (9.1 and
10.3) but in other cases it is a shared responsi-
bility. It is also important that family members
gain experience in financial management by
learning the lessons from other business
or professional employment, as case 8.3
demonstrates.
Sound decision-making processes
Most businesses seemed to be able to work
under a mixture of formal and informal meet-
ings, as they were largely comprised of family
members who knew each other well, so that
decisions made were comparable to what the
family as a whole wanted. Case 6.1 demon-
strates how the parents made the decision to
develop the stables as a business, but the
daughter Sandra was party to the detailed
planning process. Successful businesses under-
stood that there must be a clear definition of
roles and tasks; however, the family as a whole
had to be happy with major/relevant decisions
for them to go ahead.
An example of an ad hoc decision-making
was case 10.2, where there were very little
family meetings, which led simply to working
harder (not smarter!). Finally case 10.1 shows
that a key decision to commence a family
business venture can be made unilaterally in
the hope that other family members will
follow in the footsteps of the founder/decision
maker.
Computer/information technology issues
These skills were helpful in cases related to
marketing the business, such as by using the
Internet to generate business (7.1) or by being
on a collective website through a booking com-
pany (7.3). In other cases, technology was an
issue for the businesses for accounting (9.1),
computerized reservation systems (8.1) and
the design of a website for the business (6.1,
183
6.3, 7.1). One business case in particular (10.3)
demonstrated the excellent information tech-
nology skills of the owner, Bob Flemming, in
both their website and the fact that Bob delivers
training programmes in information technology
and website development for the Queensland
Department of State Development.
Business networking/marketing
The importance of good networking and
marketing cannot be overstated for small,
family businesses. Networking with other family
tourism businesses, tourism associations, con-
vention and visitor bureaux and coach tour
operators is a characteristic of most successful
tourism businesses. Only one family business
(6.2) was formally affiliated with a national
marketing group through a franchise arrange-
ment, which produced benefits for the business
through bookings and customer loyalty.
Another (8.3) was approached to franchise their
business formula in New Zealand, but decided
against it.
There is an over-reliance on favourable
word-of-mouth and repeat business (for exam-
ple, 7.1) which reflects the limited funds
available for other conventional forms of
marketing. Others realized the need for a more
professional approach, such as hiring a full-time
sales and marketing professional (9.2) and being
a part of a booking company (7.3) in addition
to the ubiquitous promotional brochures. All
businesses case-studied, except 7.1, had pro-
motional brochures. Other techniques include
family brand extension/product diversification
(8.2, 9.1); familiarization tours (8.1) and trade
show promotion (9.2). Benefits from television
specials focusing on the relevant areas (9.1)
and tourism promotional magazines were also
used (8.1). Sales commissions are also used by
one business (9.3), and other techniques include
clear market segmentation (6.1, 8.2) with strate-
gies in place (8.2) as well as marketing meetings
(8.2). The use of industry awards as a promo-
tional tool has not been embraced by many
family businesses in this set of case studies, but
those that have entered and won national
tourism awards always advertise their success
(see case 8.1).
Human resource management
The ability to manage staff effectively was
common to all family businesses that employed
non-family staff members. In most cases, the
majority of the staff members were in fact
family members such as husbands, wives, sons,
daughters and even a niece; managing staff
effectively came down to understanding the
desires and skills of family members in order
to allocate roles within the business. Indeed,
the accepted approach to human resource
management does not apply within family busi-
nesses because it is not always possible to treat
children or parents as employees (see case 8.1).
Similarly any non-family members employed in
the business must fit in with the family as well as
fulfilling their role within the business (see case
6.1). Problems came from the fact that the own-
ers tended to have to work long hours and mix
business and personal life in order to complete
necessary tasks, because they were the only
people who knew the business and its opera-
tions sufficiently to do them (6.1, 8.1). Titles
and job specifications were used, however there
is still the issue of how many tasks each person
should be allocated to effectively run the busi-
ness. Another issue was managing higher levels
of part-time/casual staff, both from within the
family and outside (6.1, 6.3). Seasonality affects
human resource management as workers are
only employed at certain times of the year due
to peaks and troughs in tourist demand.
Business planning and strategic management
This refers to the need to plan in the short- and
long-term for the survival and success of a tour-
ism business. Most expressed long-term goals
for the business, but few had a sound plan as to
how to strategically achieve those goals. In one
case (8.3) the founders failed in business due
to a lack of planning, financial controls and
business experience.
Long-term success involves partly being
able to separate themselves from the business
and work on it rather than in it (8.1, 10.3)
through employing more staff, and also by hav-
ing interested/qualified family members taking
over the business in the future (9.2). In case 8.2
166 Chapter 11
184
the business was in the third generation, with
family members competing against non-family
applicants for positions, and only appointed if
they were suitably qualified.
With regards to business planning and
growth, some businesses were more concerned
with trying to make their businesses profitable
before considering expansion (6.1). Other busi-
nesses extended both their services as well as
their business name to external activities, such as
case 9.1, where Gary was involved in consulting,
computer-assisted design, environmental sci-
ence and guiding, and case 10.3 where Bob was
involved in education and training. Other busi-
nesses extended themselves into related areas
such as case 8.2, with the opening of a winery.
It was also evident that family businesses
conduct very little research to support strategic
planning or marketing. Business, financial, mar-
keting and site feasibility studies were not under-
taken in the family businesses case-studied, but
basic cost estimates were made (6.1). Some
sought useful advice frombusiness and manage-
ment planning seminars, but in one case found
themof limiteduse (6.2). At the same time, some
government departments did prove beneficial in
the feasibility stage in providing models and pre-
dictions for the proposed tourist development
(6.2). However, it is judgement supported by
hard work and commitment that appears to be
the fundamental planning approach of family
businesses. Most businesses however had no
real plan for continuing the business, being
caught between trusting in their successors
to take over, finding external ownership/
management or disposing of the business for the
best possible price.
Seasonality and demand issues
Seasonality is a key issue that influenced both
the opening hours/dates of the business as well
as the service offered. In the example of 6.3,
seasonality serves both effectively to limit reve-
nues by cutting off services at certain times of
the year, as well as to act as a forced holiday
for employees to have a hiatus from work.
Depending on the environment and setting,
most businesses operated year-round whilst
others focused on other aspects of the business
such as farming or viticulture (6.1, 10.1) during
the low season for tourism. Another business
(6.3) considered seasonality as a double-edged
sword, with the positive aspect being the
free time for owners in the low season and the
negative being the costs associated with start-up
and shutdown for the brief high season. Indeed,
the expansion plans in case 6.3 are designed
specifically to create an all-year accommoda-
tion facility and employ staff on a full-time
basis, in order to combat seasonality (see
Chapter 5).
It was also evident that many businesses did
not realize the 24 hours-a-day, 7-days-a-week
nature of the tourism business when commenc-
ing in business. Fortunately, family members
made themselves available during the busy peri-
ods to assist with running the business on a
part-time basis (6.1, 6.3, 8.1, 8.3) while others
did not have this support option (10.3). The
demanding nature of the tourism business is a
critical issue for all family businesses; especially
those that either cannot afford to employ staff
(7.1) or dont have the option of employing fam-
ily members on a part-time or full-time basis
(8.1). In many cases, family business owners
find themselves tied to the business and are
unable to take a break fromthe demands of their
guests, unable to afford to employ support staff
or a manager and unable to find the right people
to run the business for them in their absence
(8.1). Clearly, the desirable lifestyle that often
motivates family business start-ups in tourism
regions is not always realized due to the highly
seasonal and demanding nature of the tourism
business.
Good customer service
Customer service is vital to the success of all
these businesses, especially considering that
good customer service results in favourable
word of mouth which is important for most
businesses. If customer service is not satisfac-
tory, word of mouth may be negative and the
business may suffer, especially in niche markets
such as in case 8.1. In most cases, good cus-
tomer service is enjoyable for business owners
and may even form part of the lifestyle benefits
they chose when commencing in business (6.1).
185
Good customer services in areas such as reser-
vations and bookings can be demanding but
can also be considered as an enjoyable part of
running a family business (7.3). Targeting the
top end of the market by providing quality
tourism experiences is a strategy employed by
a number of family businesses (8.1, 8.3)
However, most businesses case-studied did
not have a focus on customer service even
though it was implicit in all of their business activ-
ities, and in one case improving customer service
was stated as a business goal (6.3). Personal ser-
vice is sometimes promoted as a unique selling
point of family businesses, where the customer
knows that they are dealing with the people that
both own and operate the business. There can
also be a market perception that family busi-
nesses are unique andoffer a different product or
service to non-family businesses. This belief that
it is better to be unique than to try and compete
with existing businesses was apparent in case
6.2, with Rob claiming it is better to be different
than it is to be better. When there is a high
degree of social interaction with visitors, the
privacy of family members is lost and it can also
make it difficult to complete the daily tasks of
running the business (6.1). However, one busi-
ness does give priority to social interaction and
customer service (6.2) ahead of the other tasks in
the running the business and Rob doesnt mind
if it takes one and a half hours to empty the
rubbish bins if he is socializing with visitors
around the caravan park.
Few businesses case-studied used a cus-
tomer feedback form to monitor the satisfaction
and suggestions of guests (see case 8.1), despite
this being an effective means of improving
customer service.
Ownership Issues
Family partnerships
A number of family businesses case-studied
commenced in business in conjunction with
another family (10.2, 10.3) but in both cases the
partnership was terminated after a few years.
The issues associated with two-family businesses
were not explored, but the outcomes in both
cases were evident. Where two families have
different views and interests in the business,
dissolution of the partnership is inevitable, espe-
cially when both families seek to place their own
interests first. This termination can be acrimoni-
ous, given that both families have claim to the
intellectual property, goodwill and equity in
the business. In other cases, family businesses
can work co-operatively to cross-promote
their independent businesses (7.1 and 8.3 for
example), in provision of accommodation.
Formation of a family trust
Formation of family trusts is an effective means
of setting up legal ownership of a family busi-
ness in most cases, depending upon the corpo-
ration and taxation regimes in the countries
involved. For example in Australia, case 8.2 is
owned by two family trusts, being established in
1994 especially to ensure effectively that owner-
ship arrangements are acceptable to all family
members concerned. Family trusts can assist in
maintaining harmony and retaining family con-
trol of the business and preserving the assets of
the business for the benefit of future generations
of family members.
However, trusts also have the effect of lock-
ing away all family assets and placing them
under the control of a single trustee, thereby
unbalancing ownership and control of the busi-
ness. This becomes an issue when siblings seek
to obtain a greater level of control in the business
or when one needs to liquidate some of the
assets of the family as their personal share. The
other effect of a trust arrangement is to obligate
family members to work in the family business in
order to contribute to the asset value growth.
Functional ownership structure
In more than one case, the original ownership
structure proved to be unsuitable and did not
allow the business founders to pursue their
goals independently. This was the case in
capital-intensive businesses such as tourist
attractions, hotels and wineries that were origi-
nally owned or developed in joint partnership
with another family (10.3) or with non-family
investors (10.2). In other cases, ownership of
the business changed to enable the business to
168 Chapter 11
186
survive (8.3). In all cases, any change in owner-
ship structure is an issue that must be handled
extremely carefully if problems such as that
arising in case 7.2 are to be avoided. The
reasons for diversifying or divesting ownership
of all or part of the business are often sound,
especially as this can enable the workload and
financial obligation to be shared.
Family equity in the business
In very few businesses are family members will-
ing to invest and share equity in the business
with no expectation of a regular return, either in
the form of profit share (if available) or realizing
on the value of capital growth. Likewise, it is not
always acceptable for family members to invest
their time in the business without receiving
regular wages or dividends, but gaining sweat
equity (8.3) in return for their efforts. In most
cases, profits or capital growth tend to be
re-invested in the business (8.1, for example).
This raises the issue of family equity being
linked to land value and therefore expansion
plans of business (e.g. 10.2). The extent to which
family members take equity in the business can
have a direct influence on the business decisions,
especially the development and disposition of
the business. Increasing returns on the business
may be needed to support a growing number of
family members (8.2) or provide an income to
founding members of the family business when
they retire (9.1, 10.2). Indeed, the business may
represent the founders retirement fund (7.1)
or have been purchased with the proceeds of
superannuation or redundancy payouts (8.1).
The issuing of shares in the business to all family
members can also be considered, but has the
effect of diluting the control of the business (see
case 8.2). In case 8.3 a number of shares have
been placed in a family trust, thereby affording
the family members some protection in case of
business failure.
Manageable financial structures
Debt, rather than equity, was the main source
of capital for establishing or acquiring family
businesses in most cases, with the possible
exception of farm-based and family home-
based businesses. Land and property purchases
were financed with bank loans which meant
that interest expense was probably the highest
monthly figure in the family business accounts
on the expenditure side of the ledger. The cases
could not divulge the extent to which business
expenses were met through revenue or the
drawing down of the business profits or the
owners savings, but for most family businesses
it is probably a combination of the two. At least
one business (7.3) had banking arrangements
where credit was extended prior to the peak
season.
This is a significant ownership issue for
all small businesses, but especially family
businesses, which must manage their debt and
equity more carefully than other types of busi-
nesses. In case 7.1, the limiting of borrowings
(instilled by the father of the owner) enabled the
family business to survive a decline in the value
of their property during a period of over-supply
and bankruptcy sales. Lease arrangements are
an option for some family businesses but lease
arrangements must only be entered into after
professional and competent legal advice, if
problems are to be avoided as in case 7.2. In
case 8.1 the resort was developed over time and
this allowed the owners to avoid over-borrowing
as well as ensuring that the theme and ambience
of the site was maintained.
Access to sufficient capital
Most family businesses case-studied appeared
to be under-capitalized, particularly where their
expansion plans were concerned. In the exam-
ple of 10.2 there was a need to raise capital out-
side the family in order to expand, but raising
funds through equity proved to be unsatisfac-
tory for the owners. Most family businesses face
the dilemma of having capital tied up in land
or in the value of the business, but are reluctant
to sell any part of their land or business as a
means of raising funds. In only one case (6.1)
was a family member willing to raise funds
through land sales in order for the family busi-
ness to pay off loans if required. In another case
(6.3), access to a government grant accelerated
187
the development of the rural business and
business development was cross-subsidized by
non-business income (6.3, 10.3). Yet another
response to this issue (7.3) was to consider
closing down part of the business (accommo-
dation) in order to expand another part of
the business (conference and meeting venue).
A well-established business has more options
for raising capital and may have subsidiary
businesses (such as in case 8.2 with Canungra
Valley Vineyards) for full or partial sale. Family
businesses access a range of sources for operat-
ing funds include income from teaching and
primary production (10.2, 10.3) and private
consultancy (9.1).
Separation of family and business assets
It is important that major family assets, such
as the family home, be owned separately from
the business in case business problems arise. In
some cases family-owned farmland, but not the
family home, may be offered as collateral for
a business loan. Again the asset arrangements
of the family businesses case-studied have not
been included for reasons of privacy, but in all
cases family homes have been separated from
the fortunes of the business. In cases where the
family resides in the business location (6.1, 6.2,
6.3, 7.1, 8.2, 8.3, 10.2) deeds and titles for the
land that the home is on should be separate
from the land on which the business is based,
and in one case (6.1) this structure was put in
place very early in the life of the business.
Disposition/succession planning issues
Untimely disposition of the family business is
seldom planned, although there is usually some
agreement as to how family business ownership
will change in case of the death of the owners,
divorce or family break-up. This is not surpris-
ing, as few families want to contemplate these
matters. However, it is a reality that all family
businesses must ultimately face and it is desir-
able that agreed succession or disposition plans
are in place. The succession and ownership
issues identified in previous chapters and the
case studies indicate that few have disposition
plans and many confront barriers to the smooth
transition of business ownership. Barriers to
inheritance can be related to the financial viabil-
ity of the business and the willingness of the sec-
ond generation to take on the responsibilities
(and liabilities) of the business owners. When
the children of family business owners do not
share the same level of commitment to the
business, the issue of succession becomes more
difficult (10.2).
Cultural issues
In some cultures it may not be considered
appropriate to have children working in a family
business with parents (as was the case in the
Swedish businesses case-studied 7.1, 7.3
and 9.3), whilst in other cases the continued
involvement of children and even grand-
children of the founders was the family tradition
and accepted cultural norm (6.2, 6.3, 8.2). A
limitation of the cases included for analysis was
that they did not include businesses owned by
people with different ethnic backgrounds, and
most were of Anglo-Saxon ethnicity. Inclusion
of Asian ethnic businesses might have revealed
other ownership issues such as the preference
for male successors in Chinese family busi-
nesses (see Chapter 5). Indeed, primogeniture
may be a characteristic of many family busi-
nesses (regardless of ethnic background) and
this raises gender and equity issues in terms of
ownership and succession.
Gender and generational issues
Again, ownership can also be a function of
gender with some owners having concerns that
females may not be sufficiently skilled or inter-
ested in carrying out some of the infrastructure
and maintenance aspects of the business
(6.3), or it may be that male members of the
business possess the technical knowledge to
maintain the infrastructure but have not yet
passed on that knowledge to the children or
grandchildren (especially daughters). Given the
predominance of females employed, it would
be appropriate to have equivalent proportions
in ownership and management of family
170 Chapter 11
188
businesses in tourism. In some cases (8.3 and
9.2) it is the female family member that has the
best potential to take over the role of manage-
ment and ownership of the family business.
Chapter Summary
This chapter has identified commonalities
between case study findings of the 15 family
businesses as detailed in Chapters 610 inclu-
sive. Even though the cases were selected on
the basis of convenience, the core activities of
tourism accommodation, attractions and tours
are all represented in the cases. Two impor-
tant implications of the cross-case analysis are
worth noting here, although the wider implica-
tions will be discussed in the final two chapters.
The first point is that there is a remarkable
degree of commonality between the family
businesses case-studied, despite the differences
in their business environment, business culture,
services offered, markets, location, destination
and business characteristics. The fact that some
30 areas of common concern were identified
in this cross-case analysis has implications for
future family business research in tourism
and hospitality. The issues have been presented
under the headings of family, business and own-
ership, but there are many that cut across these
three dimensions and could be studied in much
more detail. Communication for example, can
be investigated from the family perspective
(i.e. how do the family members communicate
effectively?); from the business perspective
(what are the most appropriate forms of busi-
ness communication for family businesses?);
from the ownership perspective (which forms
of communication are most commonly used
to resolve family business ownership issues?).
There is also an opportunity to prioritize the
issues identified in this cross-case analysis, to
provide a quantitative basis for identifying and
progressing important areas of family business
research.
The second implication of the cross-case
analysis is that the common issues identified
may be representative of the issues confronting
the multitude of family businesses in tourismand
hospitality around the world. Whilst there is no
statistical test of the representativeness of the
cross-case analysis findings, the range of busi-
nesses and the geographic and temporal scope
of the case studies would mitigate against the
myopia and bias that is inherent in single-case or
single-country case studies. It would be very
interesting to develop new case studies of family
businesses in other countries and cultures
around the worldto test the extent to whichthese
commonalities can be found in other tourism
destinations.
References
Carlsen, J. and Getz, D. (2001) Cross-case analysis of
family businesses in rural tourism. In: Pforr, C.
and Janeczko, B. (eds) Proceedings of the
Capitalising on Research Conference. University
of Canberra, Canberra, Australia.
(1997) Generation to Generation: Life Cycles of
Family Business. HarvardBusiness School Press,
Patton, M.Q. (1990) Qualitative Evaluation and
Research Methods. Sage Publications, Fresno,
California.
189
190
12
Implications for Family Businesses and Tourism Destinations
Introduction
Until very recently the family business dimen-
sions within tourism and hospitality were only
occasionally acknowledged, and not subjected
to systematic analysis. Yet, as this book demon-
strates, the family vision and goals are the
foundation of small business management and
entrepreneurship. One cannot understand the
dominant small-business component of tourism
and hospitality without understanding the indi-
vidual and family dimensions. Consequently,
the policy, planning and marketing of desti-
nations, and economic development based on
tourism or hospitality, are also dependent on
better appreciation of the family perspective
on business.
In the first part of this chapter we examine
practical implications for family businesses in
tourismand hospitality, based on our evaluation
of their needs and the family-dependent
dimensions of business enterprise. It is organized
roughly in the same sequence in which major
issues were covered in the preceding chapters,
although a certain amount of cross-referencing
and integration has been incorporated.
The secondpart covers general implications
for tourism and destination management. Fam-
ily businesses are often the dominant business
form in destinations, especially in resorts, rural
and peripheral areas, and an understanding of
how they affect competitiveness is essential to
destinationmanagement. As well, economic and
community development policies especially
those aimed at creating employment must take
the family business into account to be effective.
Practical Implications for the Family
Business in Tourism and Hospitality
This section aims to provide practical advice
to those running or contemplating investment
in a family business. The advice is not all-
encompassing, as it is derived from this books
focus on identifying unique and salient issues
facing family businesses in the tourism and
hospitality industry.
We start with the issues raised in Chapter 1,
including the most fundamental are you a
family business? If so, what are the general
implications for ownership, business and family
evolution? We then attempt to draw on all
sections of the book, including the case studies,
to provide a great deal of advice some of which
consists merely of asking the reader to contem-
plate potential implications for their own busi-
ness or business plans. Answers are not always
available!
Are you a family business?
Surprisingly, many owners do not think of their
enterprise as a family business. In some cul-
tures it is not a differentiated form of business,
while in others the term might be considered to
191
have negative connotations such as its only
a mom-and-pop operation. Sole proprietors
might not consider theirs to be a family business
because their partners, children or other
relatives are not formally involved as owners
or employees. Couples working together (i.e.
copreneurs) might feel that only the involve-
ment or potential inheritance by children would
qualify theirs as a family business.
We have taken a broad, inclusive inter-
pretation of what constitutes a family business,
including all those who consider theirs to be
such, plus all sole proprietors, copreneurial
businesses, and others with some degree of
family involvement. Our inclusiveness is based
on the desire not to focus overly on technical
points of ownership and control, but rather to
concentrate on family-related issues. The most
important differentiating aspect of family busi-
ness, as argued by Chua et al. (1999), lies in
the vision of its dominant family members. The
vision must be to use the business for the better-
ment of the family potentially across more than
one generation.
In terms of practical implications, owners
should ask themselves to what degree family
members are involved, if family takes priority in
any aspect of the business, and if they hold a
family vision of using the business for betterment
of their family. If family is important, then there
are many implications contained in this book. As
well, owners must ask themselves what are their
primary motives and goals for being in business.
We look at implications of that key questionlater.
Interdependencies in the evolution of family,
business and ownership
The evolutionary perspective contained in the
model developed by Gersick et al. (1997) has
many important implications for the family busi-
ness. Ownership, business and family evolve
together, in many interdependent ways. It is the
essence of a family business that shifts in one
component will impact on others. For example,
getting children involved in the business as they
get older will potentially lead to control and
ownership issues including inheritance, while
business operations are also impacted by the
need to find each family member challenging
and responsible work. Case studies and cross-
case analysis provide examples where the
involvement and support of all family members
is not always possible nor desirable, due to the
challenges this entails. Figure 1.2 presents a
summary of challenges through the life cycle.
On the other hand, this book makes it clear
that many tourism and hospitality businesses
probably a large majority never progress
beyond the foundation stage. Owners continue
to control the business, keeping it small, and chil-
dren either do not get involved or the potential
for them to take control or inherit the venture is
not realistic. Even in these family businesses,
owners should understand the basic principle
that all families and their businesses evolve to
some extent, and that the ultimate disposition of
the business is a critical issue. Strategic thinking,
if not formal planning, is clearly necessary. How-
ever, the research and case studies provide little
evidence of business planning, let alone strategic
planning, by family businesses in tourism and
hospitality.
The business environment and
industry-specific modifiers
The business environment for tourism and
hospitality is an important consideration for
owners, and in some ways it is unique. The
case studies elucidate business opportunities
that allowpeople to pursue their leisure interests
or live in attractive surroundings such as resorts,
small towns and out-of-the-way places. Many
ventures in this industry fulfil basic needs to
socialize, meet interesting people, be self-
employed and even to earn extra money
(beyond the primary economic activity) to
support a farm or a family.
It is also a service industry in which people
skills are often paramount, hostguest contacts
are frequent andofteninthe home environment,
and long hours are the norm especially in the
peak seasons. There is fulfilment in pleasing
other people, and this is a powerful motivator,
yet burn-out is a real risk. Owners and families in
these service businesses must develop effective
strategies for preserving some degree of privacy
andquiet time, for balancing family andbusiness
life.
174 Chapter 12
192
The business environment is also risky and
challenging. Numerous tourism and hospitality
businesses are highly substitutable and do not
possess competitive advantages. Others are too
small to make much revenue, or are subject to
extreme seasonality of demand, thereby gener-
ating cash-flow problems. Locating in a rural or
remote area is appealing to many owners, but
predictable costs and problems accompany such
decisions. Family businesses in remote areas
face higher costs, greater seasonality of demand,
less opportunity for networking and marketing
collaboration, and greater difficulty in securing
suitable employees. On the other hand, there
might be government grants and technical
assistance available, as was identified in some
of the case studies.
Owners must also be aware of the implica-
tions of the destination life cycle. When operat-
ing in a tourism environment, as opposed to
catering exclusively to local-area residents, it can
be expected that opportunities and challenges
will vary over time as the destination matures.
The fate of the individual business might depend
to a greater or lesser degree on the success of the
destination in achieving sustainable competi-
tiveness and occasionally re-positioning itself.
Conversely, the competitiveness and profitabil-
ity of numerous small and family businesses can
certainly affect the destinations success chances.
The business environment also includes
culture and level of economic development.
Some cultures are very supportive of entrepre-
neurship and especially family businesses, while
in others these actions are not well-establishedor
valued. It will certainly be more challenging to
develop a successful family business in lesser-
developed economies that lack physical infra-
structure or marketing support. In the special
case of business initiatives by indigenous people,
a number of additional challenges might occur,
such as communal ownership of resources or
the need to share all decision-making at the
community level.
Easy in easy out!
Too many owners in the tourism and hospitality
industry create or purchase their business
without proper thought about their skills and
resources and the nature of the work that lies
ahead. Many are disillusioned and give up or
fail. Turnover rates in many areas are high, with
one family or sole proprietor taking over from
others. Potential investors should realize that if it
is easy to get into this line of enterprise, it might
equally be easy to fail.
A strong interest in the type of work might
be sufficient to assure business success, such as
where lifestyle and leisure interests are at the
heart of the business. As with many of the cases
in this book, having generic management skills
and experience will prove to be adequate,
assuming the owner can adapt to different
settings and environmental challenges. On the
other hand, having worked in the industry does
not necessarily prepare one for ownership.
The bottomline is that owners and potential
investors should seek training and professional
advice, while destinations and government
agencies should take these services to the family
businesses that need them.
Are you an entrepreneur?
Chapter two examined in detail the nature
and application of entrepreneurship to family
businesses in tourism and hospitality. Whether
or not one believes in the personality-trait
approach to defining entrepreneurship, every-
one in business should examine their motives,
goals, attitudes and practices with the purpose
of identifying their fundamental driving forces.
Many owners will be quite comfortable
with their autonomy and lifestyle-oriented
businesses, but a minority will not.
Understanding the entrepreneurial process
should help every owner and manager do a
better job. Being able to objectively assess risk
is a necessity in the business world, but so
to is knowing ones own acceptable degree of
risk-taking. Innovation is inherent in entrepre-
neurship, but it can be manifestedin many ways.
In some of our case studies, this means a com-
pletely new venture or way of doing business,
while to others it is an element in providing better
customer service or more creative packaging or
programming
Mobilizing resources is an essential element
in the entrepreneurial process. How well do
Implications for Family Businesses and Destinations 175
193
family-business owners secure, invest and
achieve acceptable returns from available
resources including a return on their own
effort? Many small family businesses are too
small ever to become profitable or support
a family does that matter? Taking on debt
exposes one to increased risk, but is essential for
growth is it an unacceptable risk in the context
of the familys security, or protection of its leg-
acy? What is necessary to create and sustain a
business capable of being inherited by the next
generation? Some businesses are built up to a
point where they can be sold for the best price,
while others (especially farm-based businesses)
would rarely be sold. This book contains exam-
ples of both highly entrepreneurial and highly
risk-averse family businesses.
Business and strategic planning
Formal planning is associated with business
success, although it is sometimes unclear if
talent leads to planning efforts or planning
leads to improved performance. Advice has
been given in Chapter 4 about preparing a busi-
ness plan, with a number of key planning issues
being identified. These include control of the
business, careers for family members, capital
and reinvestment, conflict resolution, and deal-
ing with a family culture (Carlock and Ward,
2001). Those authors also recommended a par-
allel system of planning for the business and the
family, including a family enterprise continuity
plan which specifies the vision and strategies to
achieve it.
Strategies and options
Generic business strategies can be pursued
by the family business. For example, the
defender strategy involves sticking to what
the firm knows best, the innovator/prospector
strategy embodies taking risks and is therefore
most suited to the growth-oriented entre-
preneur, and the analyser strategy seeks com-
petitive advantage through adoption of proven
strategies (Miles and Snow, 1978). Carlock and
Ward (2001) discussed three generic strategies
that have applicability to family businesses,
especially at the point of succession. A renewal
strategy focuses the owners attention on getting
more out of current capabilities and markets,
such as through value-adding investments.
Reformulation implies improvement of the
business strategy, such as by developing new
markets. Regeneration applies when a new
owner or inheritor has to make fundamental
changes or investments to ensure viability of the
business.
More importantly, family-business owners
should look to the specific competitive advan-
tages that a family business entails, such as
sacrifice, use of family resources, family
networks, unified management and strategy,
integrity, loyalty and dedication, tradition,
special knowledge, continuity and a long-
term orientation to achieving results (Donnelly,
1964). Inherent weaknesses must also be
avoided. These can include conflicts between
business and family interests, lack of discipline
over resources, failure to adapt or quickly
respond to opportunities, and nepotism.
Niche marketing
Small businesses almost inevitably pursue niche
markets, not mass markets, and the trick is to
find those customers willing to pay higher prices
for the services and atmosphere that only a
family business can provide. The case studies
and research found limited use of target market-
ing, which implies that there is a potential
for family businesses to pursue this form of
marketing strategy in the future.
Networking and collaboration
Being small and often isolated, family busi-
nesses in tourism and hospitality can benefit
greatly from business-to-business networking
and the kind of family or social networking
that provides support. Informal and formal
marketing alliances or other collaborations
among businesses can be essential for market-
ing effectiveness and innovation, as the case
studies have demonstrated.
176 Chapter 12
194
Other options
When the goal is to remain small and under
control, but profitable, it can be called the
sustainability option. Nevertheless, specific
strategies and investments may be required it
does not imply doing nothing. Regardless of
growth orientation, virtually every family busi-
ness can benefit from a planned value-adding
strategy. This might include investment in
technology or internet advertising, quality and
efficiency improvements, and new services that
generate money. Filling unused occupancy by
tapping new markets is value adding, as is the
practice of yield management to maximize
revenues.
Family Branding is an option only
available to family businesses. It features the
family behind the services offered and makes
it part of the product. The family name can
become a trade-mark (for example, OReillys
Guesthouse), and family members can develop
reputations and even legends. Family branding
stresses relationship marketing with specific
segments, and features the intangible brand
attributes of quality, value, tradition and
personality. Ethnicity might also be a factor.
Diversification into other types of business
or other areas is sometimes tempting, but usually
rejected by autonomy-seekers and those who
value small businesses, because of the costs and
strains it can impose. Experts agree that going
outside ones area of expertise and experience
is highly risky, yet adding new markets (e.g.
residents plus tourists) or developing products
for export, was a viable strategy for a number
of family-business owners in Bornholm (see
Chapter 5).
Responses to seasonality
Evidence from Bornholm, Denmark, demon-
strated several strategic responses by family
businesses to extreme seasonality of demand.
A majority of owners accepted the limitations
imposed by seasonality and coped with it by
closing for part of the year. For small, part-time
businesses this might not be a problem, and for
some owners it could be a welcome respite.
Families have to adjust to these changes, both
in terms of cash-flow and work-load. Combat-
ing strategies were practised by owners who
sought to reduce demand fluctuations by
expanding their season and/or broadening their
market base. Some developed export markets,
while others catered to residents in the off-peak
seasons.
In extreme cases, capitulation might be
forced on owners, such as selling the business,
shrinking or terminating it. Most of the Bornholm
respondents wanted a longer tourism season,
realizing that would greatly enhance their
profitability.
Financial management
A major issue facing many families is that of
taking money out of the business for personal
uses versus having a plan that requires savings
and re-investment. Those not seeking growth
might think that there is no need for accrual
of working capital, but they will probably find
it necessary, sooner or later, for maintenance,
improvements and value-adding investments.
Case studies and cross-case analysis
show that many family businesses are under-
capitalized. This becomes an issue when they
expand (or even disband) the business, and
access to capital is needed to fund further
expansion or buy-out the shares of exiting
family members.
Ownership, organization and governance
Simple forms of direct ownership are most
common, but the growth- and profit-oriented
entrepreneur generally seeks company status in
order to protect family assets and help generate
external capital. If the business develops into
a multi-generational firm, ownership probably
has to evolve as well, with consideration given
to a family trust or sibling/family partnerships.
It might be wise to separate ownership of the
tourism/hospitality business from other family
assets including the land (as some of our case
studies demonstrate), although lenders often
require these assets as collateral.
Because most family businesses in
this industry are small and operated by
195
autonomy-seekers, their organizational structure
remains very simple and topdown. Often the
owners do everything! Growth, and the hiring of
professional staff, may lead to more sophisti-
cated and formal management systems. Retain-
ing family ownership and control might become
an issue where professional managers have
day-to-day oversight of the business. The estab-
lishment of a Board of Directors, including exter-
nal experts, is a recommended development for
the larger and growth-oriented family firm.
Parallel to the Board, a formal Family
Council can be established to oversee the
ownership and long-term strategy. Also, a
Family Agreement can be drafted to govern
ownership, such as a family-members rights to
acquire and/or dispose of shares. The Family
Trust, as exhibited in the OReillys case, is a
specific form of ownership designed to sustain
family ownership and control through the
generations, but it might eventually give rise to
problems when descendents cannot realize a
cash value for their inheritance.
The meaning and causes of failure
Failure in a family business can have disastrous
consequences for the family, which helps
explain the tendency of owners to be risk-
averse. Given that the rate of outright failure
among small businesses in general is high, and
tourism/hospitality enterprises would appear to
fare no better than average, it is wise for owners
to consider reasons for failure and strategies for
success. Even though our research showed that
many respondents were not profit- and growth-
oriented, in the entrepreneurial sense, almost
all of them explicitly desired to make and keep
the business profitable. The next-most common
goal among family-business owners in general
is to increase the firms value. Success and fail-
ure can best be evaluated against the owners
goals and needs. For some, mere survival will
be a sufficient indicator of success, while for
others leaving a sustainable family legacy will
signify success. Getting children involved and
passing on the business to them is a very spe-
cific and evidently rare definition of success,
although some of our case studies indicate that
this is possible.
Common causes of failure for small and
family businesses include a lack of business
expertise, high costs (especially in isolated
areas), under-capitalization and small size
(which limit growth and profit potential), a harsh
business environment (particularly extreme sea-
sonality of demand and unlimited competition)
and the absence of marketing alliances or other
forms of cooperation and support. There is little
evidence to determine if avoidance of debt is a
success or failure factor.
Although innovation and growth might
be desired, researchers and industry experts all
agree that owners shouldstick to what they know
best. Diversification beyond ones immediate
area of expertise and experience could prove
fatal for the business.
Preconditions and barriers to growth
Although growth is shunned by the majority, it
is vigorously pursued by others. Every family-
business owner should carefully consider the
pros and cons of growth and alternative long-
term strategies for their business. In particular,
growth (and related innovations) might be
necessary to sustain a competitive position or
to achieve an acceptable family income.
Resources are the main determinant of
growth potential. Revenue has to be saved in
the business (i.e. working capital), borrowed, or
attracted from investors. Family sacrifices might
be necessary, trading the desired immediate
gains for longer-term income potential. The
resource-based theory of the firm suggests that
families might possess unique bundles of tangi-
ble resources (including family investments and
land) that can be the basis of growth. As well, the
knowledge-based theory of the firm suggests
that families might possess intangible resources,
especially specialized knowledge of markets or
products/services, which give them advantages.
Specific barriers to growthfor family firms in
tourism and hospitality were discussed. They
include the kind of family vision that results in a
lack of motivation; a family impasse over goals
or strategies; a lack of market intelligence; and
inability to be competitive within the market
area, laws or regulations. All these have to be
assessed when formulating strategy.
178 Chapter 12
196
Achieving growth and maximizing profits
Owners have the option of following a strategy
of sustaining the business, in the interest of
preserving autonomy and maximizing lifestyle
benefits, or risking more and striving for growth
and higher profit. Anyone seeking this latter
path should have sound knowledge of business
management and strategy in general, and of
their tourism/hospitality business environment
in detail.
Our research points to a number of factors
associated with successful growth and increased
profitability among family business owners in
this industry, namely:
They respond strongly in the affirmative to

the statement I want to keep the business
growing.
They are opportunists, and this includes

consciously seeking to purchase businesses
with higher profits and growth potential.
They are more likely to invest in hotels and

restaurants, or attractions, as opposed to
small accommodation units (e.g. pensions
or B&B) or arts and crafts operations.
They are more likely to be copreneurs

than sole proprietors without family
involvement in the business (as these latter
owners tend to be females either running a
secondary or micro business).
They are more likely to own a limited com-

pany, as this legal arrangement protects
their family and allows easier acquisition of
capital from lenders and investors.
They are more likely to involve children

(although this might be a chicken-and-
egg situation i.e. is growth necessary
for involvement of children or intended
to permit their involvement?).
They are more likely to be male (although

the exact causes of this difference are not
known; there might be profound cultural
differences at work).
They adopt deliberate strategies that

include market and product diversification,
such as catering to both residents and tour-
ists (owing to seasonality of demand) and
developing export markets.
They recognize the need for employees,

debt, and innovation.
They love the challenge of growing the

business.
They are also motivated by lifestyle

benefits.
Involving the next generation and succession
Owners of family businesses who have children
must decide at some point whether children are
to be involved in the business, and if so is inher-
itance a prospect? A related issue is that of the
family legacy perhaps a farm or other real
estate that is intended to be kept permanently
in the family.
Apparently inheritance happens in only a
small minority of family businesses in tourism
and hospitality, and there are a number of
reasons. The absence of potential heirs is the
most fundamental barrier, and is often created
or exacerbated by parents making a decision
to establish or purchase the tourism/hospitality
business as a second career or even with retire-
ment in mind; by then, the children have usually
gone elsewhere. Permanent out-migration by
youth for purposes of advanced education and
employment is typical of remote and economi-
cally disadvantaged regions. As well, children
exposed to the business froman early age might
be turned off by the long hours, lack of privacy,
nature of the work, or its low levels of income.
They might become interested in establishing
their own business, rather than taking over, as
occurred in several of our case studies.
Another barrier is the common practice of
not separating the business from other assets,
usually farmland. This inseparability reduces or
eliminates the chances for continuance of the
tourism/hospitality business. Gender can also
be a problem, as many females are not given
serious consideration as inheritors, or even to
becoming involved seriously in a family busi-
ness. Where the business is run by females it is
often secondary to a farm or other economic
activity, and will not survive the founder.
When parents want their children to be
involved or to inherit, they have to plan it care-
fully yet research continuously reveals a very
low rate of succession planning in family busi-
nesses of all types. We provided expert opinion
on how best to get children involved and to
197
prepare for succession. According to Lansberg
(1988) there should be a shared vision within the
family, and this appears to be the fundamental
pre-condition. Numerous tourism and hospital-
ity businesses simply do not have what it takes to
inspire the next generation, and many owners in
fact would prefer their offspring to seek other
professional careers.
Getting children involved early is impor-
tant, then developing a responsible career path
for them. Knowing when to pass the baton, and
bringing oneself to that critical point in life, is a
crucial concern for business founders. Structures
have to be put in place, such as a family council
or continuity plan, and estate planning practiced
to ensure a smooth transition that benefits both
generations.
Balancing Family and Business
through the Life Cycle
Although not all owners want their family to
be involved or place family interests ahead of
the business, balancing family with business
through the life cycle is likely to be of impor-
tance to all owners, at least some of the time.
Indeed, the balancing challenge will vary
through stages in the life cycle of the business
and the family as they evolve together.
Generic challenges identified by Carlock
and Ward (2001) apply to most family-business
owners. There is the matter of control and
decision-making, and the related issue of family
culture. Is it a collaborative family or patriar-
chal? Developing meaningful and equal careers
for couples and for children is a challenge, and
means for identifying and resolving conflicts
have to be found. Finally, the matter of capital
and re-investment is a potential challenge,
especially when families want to take money
out of the business for immediate use.
Our cross-case analysis revealed the impor-
tance of achieving family consensus in decision-
making, especially when couples work together.
Finding work of equal value is a challenge.
Getting children or other potential successors
involved in meaningful ways is a key to success-
ful transition. A strong interest in particular
leisure opportunities motivates some families to
establish their tourism or hospitality business,
or at least shapes their locational choice, and
having common family leisure pursuits could be
a major balancing tool.
Roles in family businesses might be deter-
mined by gender or age, yet it is highly desirable
to allow every participant to try new roles
and find the ones they are comfortable with.
The assumption that certain tasks are womens
work runs deep, especially in the hospitality ser-
vices, but this can be a source of tension as well
as a limiting factor when it comes to ensuring
business success.
Resolving conflicts and facing adversity
Mechanisms should be put in place to identify
and resolve sources of potential conflict. They
might include informal meetings and more
formal Family Councils or Codes of Conduct.
Although unpredictable, adversity of some kind
can be expected for example, in two cases
studied in this book, the eldest son and desig-
nated heir were tragically killed in accidents.
Having the ability to adapt will prove to be a
valuable family asset. Facing adversity involves
testing the strength of family bonds during the
difficult periods in the life cycle of the business.
Existing family relationships also have
bearing on the ability of a family to prevent
disharmony and indeed this rates highly as a
business goal for many family businesses we
have studied. Cross-case analysis identified
ways that businesses avoid conflict by including
all family members in decision-making, attempt-
ing to achieve consensus, having siblings
involved in the business and having family
members involved from an early stage in
business development.
Support mechanisms
The level of family support for a business
venture is a key success factor. Sole proprietors
draw on other family members, often infor-
mally, while couples at least sometimes need
the help of children or other family members.
This principle might extend to larger family
180 Chapter 12
198
and friend networks, or ethnic communities,
and certainly applies to joint marketing and
other forms of collaboration among small
and family businesses. Private financing is one
hallmark of the family business.
Public-sector support is often directed at
small and medium businesses, but seldom takes
into account the specific needs and preferences
of family business. The assumption that all
owners want to grow and maximize profits is
false, and probably hinders effective support for
this sector.
Family business traditions
Enterprise does run in some families, although
there is no certainty that inheriting an entre-
preneurial orientation will lead children to
become involved or take over a family business
they might very well want to create their
own! Family continuity has its advantages, not
least of which is the knowledge gained over
many years or several generations, but parents
might have to help their children use this knowl-
edge to go out on their own ventures. Where
tradition is a force for involving one or more
children in the business (often the eldest son is
pressured) it can have negative consequences,
such as rebellion by the child or a mismatch
between talents, interests and ownership
responsibilities.
The legacy
The desire to create or perpetuate a family
legacy can be a powerful motivator, especially
when farmland or other real estate is involved,
such as the family home. Tourism might pro-
vide one means to help preserve property in
the family, or enable continuation of otherwise
unsustainable farm operations. Certainly the
case studies demonstrate that retaining owner-
ship of family farms or homes is a powerful
motivator for starting a tourism business. Leg-
acy can also be something intangible, such
as maintaining a family tradition of service
to visitors which may have commenced in
previous generations.
Gender
Gender has been a major issue in the tourism
and hospitality literature, although the empha-
sis has not been on gender within a family
context, but on the unique challenges facing
female entrepreneurs. Many family businesses
are started and operated by women, often with-
out moral or financial support, and encompass-
ing the need to balance housework, mothering
and business pressures. In many family busi-
nesses, however, couples start and manage the
business as equals. Another important issue is
that of getting daughters involved in a family
business and preparing them for inheritance, as
in many cultures they are ignored.
Most studies have focused on rural and
specifically farm-related ventures, so the evi-
dence on gender issues is somewhat limited.
However, McGibbons (2000) detailed study
of women and guest houses in the resort town
of St Anton, Austria, provides detailed insights
in a different environment. From this and
other research, it becomes clear that cultural
differences directly affect the family and business
roles of women and their entrepreneurial
activities.
One major implication of the available
research is that there are clear incentives,
rewards, costs and challenges related to women
in business. Not the least of these is the issue
of so-called womens work which is a cultural
bias towards the kinds of work expected of and
acceptable for women to perform. In developed
economies, with plenty of alternatives for
women, it is not such an issue. In those econo-
mies, such as the ones studied in this book,
copreneurial activities are of equal or greater
importance. Our research showed that when it
comes to goals, male and female respondents
showed no significant differences.
Strategies for managing family and business
Because home and business often overlap in
the tourism and hospitality industry, especially
in the provision of accommodation, ways must
be found to ensure a degree of privacy and to
maximize family-time, without the intrusions of
guests. Physical or psychological barriers can be
199
erected, including signs, fences, and locks on
doors. Most owners we spoke to expressed a
desire to find (and be able to afford) trustworthy
staff to help relieve the burden, yet human
resource management can also become a major
headache as a company grows. Time manage-
ment has to be effectively practised, and this
goes with a positive attitude both towards the
work and the need for relief from it.
Family business and the environment
Our survey in Western Australia sought to
determine if family business owners were
concerned about the environment and imple-
mented practices specifically for conservation or
enhancement. There was some evidence that
this was the case, but more research will be
needed on that point. There is no doubt, how-
ever, that family businesses in tourism and
hospitality are often tied to the land (e.g. on
farms) or directly linked to natural and heritage
resources. Accordingly owners should be
concerned about sustainability of the resource
base, and in rural and remote areas in particular
they are often in a position to have influence on
policy and accepted business practices. Inter-
generational equity in terms of access to the
natural environment could also be expected
to come in to play in nature-based family
businesses.
Implications for Tourism and
Destination Management
Very little recognition has been given in the
tourism and hospitality literature to the impor-
tance of the family or the individual entre-
preneur in shaping community and economic
development or destination competitiveness.
Attention has been paid to the entrepreneurs
and to issues applicable to small and medium-
sized enterprises, but as this book has demon-
strated it is often the family vision that lies
behind the visible actions or inactivity.
We did not set out specifically to study
implications for tourism, destinations, economic
or community development, but some did
emerge. To articulate them requires a certain
amount of repetition, but in a different light
from the implications drawn for specific family
businesses and owners. The predominance of
family businesses in many tourismdestinations is
also justification for examining the implications
for tourism and destination management.
Destination competitiveness and marketing
Tourism scholars have traditionally paid much
more attention to the destination than to indi-
vidual business units, while hospitality scholars
have focused on management issues within the
firm rather than its ownership and governance
by individuals and families.
In a paper delivered at a conference with
the theme Reinventing the Destination, Getz
and Petersen (2002) argued that the individual
business was not merely a factor in destination
competitiveness as some models have sug-
gested but that the purpose of destination
management and marketing organizations was
to make businesses competitive. Without
profitable and sustainable family businesses,
and without growth-oriented entrepreneurs,
destinations cannot develop or sustain a
competitive advantage.
The fact that most small, family businesses
are not growth-oriented, and many are competi-
tively weak, presents a serious challenge to eco-
nomic development agencies and to destination
marketing organizations. Other authors have
cautioned that lifestyle-oriented owners might
not want to make a commitment to various
business support schemes or even to seek out
information (e.g. Shaw and Williams, 1997).
Brownlee (1994) argued that the owners of small
businesses must be engaged to assess their goals
and the help they need relative to their goals and
resources.
Hall and Jenkins (1997) identified 18 types
of instruments used by governments to promote
the development of rural tourism. These
included regulations, monetary investment,
capital expenditures, training, advice, research
and establishment of business incubators. Deter-
mining which actions or combinations work best
for family businesses should be a priority.
182 Chapter 12
200
Destination marketing
Is it logical to promote family businesses sepa-
rately, or as particular assets within the context
of destination marketing? There might be a case
made for this strategy if the family-business
sector is sufficiently well developed and pro-
vides high-quality or unique services. However,
Destination Marketing Organizations (DMOs)
tend to pay little attention to the small and
family businesses in their domain because they
lack funds for co-marketing efforts, or because
they are simply perceived to be irrelevant to the
bigger job of establishing a positive destination
image and competitive attractions. Some atti-
tudes in DMOs have to be changed, because in
many instances their marketing is useless if the
small- and family-business sector cannot match
the promises being made.
Fostering and contributing to marketing
consortia by small and family businesses should
be a standard operating procedure for DMOs.
Particular attention should be given to net-
working for purposes of learning, stimulating
innovations and achieving economies of scale in
purchasing or advertising. A separate small- and
family-business marketing campaign might very
well be justified.
Economic development
The primary connection to economic develop-
ment is through the creation of jobs, and most
family businesses in tourism and hospitality
remain small and struggle to be able to afford
to hire full-time staff. Can this be influenced?
A two-pronged strategy will be required, with
one focused on identifying and cultivating the
growth-oriented entrepreneur and the other
working with more conservative, autonomy-
and lifestyle-oriented owners.
Data from Canmore and Bornholm clearly
identifiedthe existence of growth-orientedentre-
preneurs and went some distance in characteriz-
ing them, their businesses and their goals and
strategies. This knowledge should be used to
help identify, attract and cultivate those entre-
preneurs with the greatest potential to create
employment and wealth.
Typical approaches to small-business nur-
turing might have to be altered. For example,
why assist in the establishment of businesses that
have little or no prospect of growth because the
owners do not want it? Assistance for entrepre-
neurs to both establish and purchase businesses
with a view to profit maximization and growth
makes a lot more sense.
As for the lifestyle-oriented owners who
abound in this industry, is there any reasonable
hope that some of them can be induced to grow
their businesses? It is logical to assume that latent
entrepreneurship exists in the industry that
many are actually constrainedentrepreneurs as
identified by Shaw and Williams (1997). If so,
then identificationof the very specific constraints
holding themback, and ways to counter them, is
a necessity. A number of those constraints have
been highlighted in this book.
The first major constraint is a fear of incur-
ring debt and the risks that implies for a family.
Can ways be found to reduce the risk or per-
ceived risk? One of our case studies illustrated
howborrowing todevelopthe business was justi-
fied financially because the value of underlying
assets (the farm land) exceeded the liability is
this a model that can be refined and applied
throughpolicy? Can loans be linkedwithtraining
and advice to increase the likelihood of success?
Taking the learning materials and expert advice
directly to family-business owners is probably a
necessity, as few of them will be able to leave
their operations.
A second major constraint is the fact that
many, if not most of the owners in this industry
are not particularly well qualifiedthrough experi-
ence and training. Not only do they require edu-
cational assistance, but they need models and a
vision of what they can become. Benchmarking
against successful family businesses that have
grown will probably help to stimulate latent
entrepreneurship, as will provision of detailed
growth models (i.e. the financial, strategic and
operational steps needed).
Within the context of economic develop-
ment another priority should be to examine
how family businesses create and invest wealth
through tourism and hospitality services, how
their developments and legacies tangibly affect
regions and nations, and what can be done to
maximize wealth creation. Tax laws, particularly
201
related to inheritance, should be evaluated in
viewof the desirability of perpetuating andgrow-
ing family legacies, as opposed to diminishing or
preventing them.
Community development
Family businesses can be important anywhere,
but are often the cornerstone of community
development in small towns, rural and remote
areas. The specific roles they can play relate to
the provision of leadership (e.g. for economic
and environmental policy), stability across the
generations (which can perpetuate valuable
local knowledge and traditions), self-confidence
in the communitys ability to survive and pros-
per (through the example of successful busi-
nesses), and support for other locally-owned
businesses. As well, the mere fact that families
are sustainable in some areas helps to ensure
the survival of schools and other social infra-
structure. If an area cannot attract and hold
families, its population will most probably
decline, beginning or reinforcing a downward
spiral.
Chapter Summary
This first of two concluding chapters has
summarized important implications from the
literature and research documented in this
book specific to the individual family business.
Secondly, it has drawn implications for the
broader policy domains of tourism and desti-
nation competitiveness, economic and commu-
nity development. In doing so it has raised a
number of issues to do with the structure, own-
ership, location, education, management, ori-
entation and continuation of family businesses.
Achieving a balance between family and busi-
ness commitments throughout the life cycle of
the business remains a major challenge which
has implications not only for the family
business, but also for the tourism destinations,
destination management organizations and the
community in which these businesses operate.
References
Brownlee, D. (1994) Market opportunity analysis:
a DIY approach for small tourism enterprises.
Entrepreneurs and Destination Competitive-
ness. Paper presented at the Re-Inventing the
Lansberg, I. (1988) The succession conspiracy. Family
M., Long, P., Evans, N., Sharpley, R. and
Swarbrooke, J. (eds) Reflections on International
Tourism: Expressions of Culture Identity
and Meaning in Tourism. Business Education
New York.
184 Chapter 12
202
13
Implications for Research and Theory
Introduction
The first part of this final chapter returns to the
beginning of the book in search of research
gaps and to formulate a research agenda. Gaps
are identified by assessing the extent and nature
of tourism and hospitality-specific literature (as
presented throughout this book), compared to
the three-axes model of family business, and
to the identified themes and topics found in
generic family-business literature.
The second part addresses theory develop-
ment. It has been argued that the nature of
the tourism and hospitality industry, especially
the settings or business environments in which
family businesses operate, modifies family
businesses in a number of ways. A model
was presented in Chapter 1, and we return to
that framework to formulate a number of major
propositions that canbe usedinbuilding theory.
Developing a Research Agenda
The three-axis model of Gersick et al. (1997)
provides the starting point. First, ownership is
examined. What do we know about unique
forms of family business ownership within tour-
ism and hospitality, and how these forms might
change as the business evolves? Ownership also
covers control and governance. The second
axis to be summarized is business evolution,
and the third is family.
Ownership
Control is a generic family business theme
that has been neglected in the tourism and
hospitality literature. Related questions include
the problem of how to ensure that children
receive benefits from the family business while
control remains within the family. There has
been no attention paid to unique forms of
ownership, nor their evolution, in these sectors,
even though it is apparent that many such
businesses are tied to family property or lack
tangible assets.
Because a majority are run by couples,
there is a need to examine how they arrange
ownership; at least one study (McGibbon, 2000)
noted that women can be disenfranchised in
some cultures. Succession within a family and
between generations has barely been consid-
ered in the tourism and hospitality literature, yet
it is the dominant generic family business theme.
The study by Getz and Carlsen (2000) con-
cluded that a majority had no succession
plan. Specific barriers to inheritance should
be examined in different settings.
Longitudinal research is the best way to
deal with many issues pertaining to the family
business life cycle. Case studies of success and
failure stories will be useful, but comparisons
over time will probably be more valuable
theoretically. For example, researchers could
examine family business start-ups and evolution
within a specific area over many years.
203
Business
Motives and goals have been studied to some
degree, enough at least to conclude that in
tourism and hospitality enterprises, lifestyle and
locational preferences are extremely important.
Failure has been studied, but not specifically
linked to the core family vision. Does family
business in these sectors perform worse than
corporations? The involvement of professionals
as managers, staff or directors in family busi-
nesses has not been addressed.
Analysis of stafffamily interaction is a
potential research topic. The lack of entrepre-
neurship has been identified, but not tested
systematically. The notion of constrained
entrepreneurship should be explored more
fully, including determination of what mecha-
nisms would best facilitate greater entre-
preneurial activity among family businesses.
Also, almost all the literature pertains to micro
and small businesses, even though some family
businesses grow to a large size.
There is a great need for systematic
and comparative research of several topics: of
settings (e.g. rural versus urban and resort envi-
ronments); family versus non-family businesses;
sole-proprietor versus copreneurs and larger
family businesses; developed versus remote
rural areas with dispersed infrastructure; small
versus large businesses, and so on. To evaluate
what is unique about tourism and hospitality
businesses will require comparisons within
these sectors, and with other types of service
businesses.
Family
Gender has received the most attention, partic-
ularly female entrepreneurs in home-based
tourism and hospitality businesses. Curiously,
the couple as copreneurs has been neglected,
even though this ownership form is probably
most typical in family businesses. As well, chil-
dren have been overlooked their introduction
to the business, involvement over time with its
management and ownership, and whether or
not they share the core family vision.
It is known that family-first, or lifestyle entre-
preneurship, probably dominates these sectors,
but no researchers have examined the minutiae
of decision making in family businesses. How
exactly do family vision or lifestyle preferences
interfere with business? Why cant they be suc-
cessfully combined? How do family businesses
that growdiffer fromstatic enterprises in terms of
changing family attitudes, roles andchallenges?
Generic family business themes and topics
We re-visit Fig. 1.3 for a summary of generic
family business themes and topics, as derived
from Sharma et al. (1996). Not all of these
major themes and specific topics have been
considered or adequately developed in the
tourism and hospitality literature.
Definitions
There is no need to invent new definitions
on an industry-by-industry basis. However, it is
important to realize that in tourismand hospital-
ity the vast majority of family businesses are
not classic, multi-generation firms; most never
go beyond the foundation stage in terms of
ownership, business or family evolution. Thus,
the most important point is for researchers
to recognize that it is the family vision that
defines and distinguishes these ventures from
others.
Appropriate research questions:
What is the extent (a definitional and

measurement problem) and significance
(requiring evaluation from multiple per-
spectives) of family business in various
tourism and hospitality environments?
What are the unique components of

the family vision in tourism and
hospitality (e.g. related to leisure interests,
locational preferences, service orientation,
autonomy-seeking)?
In terms of types of family business, the
most common in tourism and hospitality are
the copreneurial venture in which husband
and wife (and sometimes other partners) work
the business together and often equally. Those
involving children are special cases, and those
leading to inheritance are rare.
186 Chapter 13
204
Are there unique forms of family business

in tourism and hospitality? (i.e. Are copre-
neurial structures different because of the
nature of the business environment or
the motives and goals of owners?)
Uniqueness of family business
Generically, we have already defined the
fundamental uniqueness of the family business
in terms of the family vision and how it shapes
the evolution of business, ownership and family
inter-dependencies over time. This should hold
true regardless of the industry, although no-one
has challenged that hypothesis. One topic of
particular interest, hitherto unexplored, is family
branding in tourism and hospitality businesses.
Are there unique aspects of tourism

and hospitality that influence the inherent
strengths or weaknesses of family business?
Are there unique opportunities and aspects

of family branding in tourism and hospital-
ity (e.g. because of the nature of the
services and the business environments)?
Life cycle
Most family businesses in tourism and hospital-
ity appear to remain frozen in the first stage
where founders dominate, the business is not
grown, and succession is not even a possibility.
More and comparative cases of multi-
generational families are needed to make a
meaningful contribution to understanding
evolutionary forces and to determine if they
are in any way unique to the industry or setting.
How do family businesses in tourism

and hospitality evolve over time in terms
of inter-dependencies among business,
ownership and family?
Is there anything unique about the evolution

of family businesses in tourism and hospi-
tality other than the observation that most
do not go beyond the foundation stage?
Succession and inheritance
This theme has dominated the generic family
business literature, but has seldom been raised
in the tourism and hospitality literature. The
research from Bornholm reported in this book is
ground-breaking in this context.
Does the observed rarity of inheritance in

family businesses in tourismand hospitality
vary by setting or particular features of the
business environment (e.g. is it different in
developing economies or highly developed
resorts and cities)?
How can the severe barriers to inheritance

be mitigated (e.g. by tax policies,
assistance to grow the family business,
improvements to the work environment,
education and training opportunities, etc.)?
Governance
Because the whole subject of family business in
tourism and hospitality has either been sub-
sumed under the broader topic of small and
medium-sized business, or ignored because of
a pre-occupation with large, public companies,
the topics of ownership, control and gover-
nance in family businesses have largely
been ignored. The unique opportunities and
implications of family trusts deserve further
exploration, especially in light of the OReillys
case documented in this book.
Do family businesses in tourism and

hospitality invent or adopt unique forms
of ownership, control or governance?
What are the implications and relative

degrees of effectiveness of various means
(such as family trusts) of preserving family
control across generations? (This question
should also be linked to the one related to
family branding.)
Strategic management
The theme of family vision is problematic
when most owners in this industry do not plan
for succession or inheritance, or it is simply not
practical for them. The family vision in these
businesses has more to do with personal and
copreneurial lifestyles, autonomy-seeking, and
realizing a decent economic return on effort.
A special case exists when a family legacy of
real property is at stake.
Implications for Research and Theory 187
205
Business and strategic planning is weak
across the industry, and the full range of business
strategies available to the family-business owner
is often not evaluated.
What are the variations on family

vision found in tourism and hospitality
businesses?
Why do some families give importance to

the concept of a family legacy? How does
that influence the decisions of parents and
children?
How can autonomy and lifestyle-oriented

owners be assisted to adopt business and
strategic planning?
The founders
We have explored founding motives and goals
in depth, finding that lifestyle and autonomy
are predominant considerations, while profit-
and growth-oriented entrepreneurs are in the
minority in this industry. Because succession is
generally not an issue, leadership is more a
question of how sole proprietors shape their
business and how copreneurs work together
towards common goals. Passing the baton is a
rare issue, although there is no evidence for
saying that founders in this industry are more or
less reluctant than those in other types of family
business to let go of control.
More research on motives and goals in dif-
ferent settings, and how they might change over
time, will be important. Also, goal incongruence
and divergence among family members should
be examined in multi-generational businesses.
The details of how decisions are made have not
been examined, nor have the subtleties of family
dynamics in tourism and hospitality businesses.
There are, a priori, reasons for suspecting that
the service orientation and other aspects of
the tourism/hospitality business environment
will shape decision-making (e.g. related to
gender roles), the evolution of goals (e.g. getting
burned-out), and the practical questions of
viable succession.
Entrepreneurship must become a major
theme in tourism and hospitality studies. It
has been shown in many studies to be lacking,
or at least limited, yet it is highly desired by
tourism destination managers and economic
or community policy-makers. By examining in
detail the motives and goals of family-business
owners we have been able to demonstrate why
so few businesses in this industry pursue growth
and why so few are innovative or even com-
petitive. This raises the matter of how policy
and planning might attract or generate
higher levels of entrepreneurship, even among
autonomy- and lifestyle-seekers. Can a formula
be developed, for example, to encourage small,
family-business owners to adopt growth-
oriented goals, re-invest in their businesses
and become more competitive?
Do founders motives and goals vary

according to setting or other environmental
factors?
How are business- and family-related

decisions actually made and enforced in
various types of family? Does the type of
business make a difference?
How might entrepreneurship be increased

among the lifestyle- and autonomy-seekers
that dominate tourism and hospitality?
Family influence and dynamics
Family culture has not been systematically
researched, especially with regard to values, the
importance of a family legacy, or entrepreneur-
ship. Gender has been examined in some detail,
but mainly in the context of female entrepre-
neurs establishing tourism or hospitality ventures
and primarily in farm or rural settings. The
other topics under this theme (copreneurship,
sibling rivalry, intergenerational relationships,
nepotism) appear to be completely new for
tourism and hospitality researchers.
Are there unique aspects of family culture

within and leading to family businesses in
tourism and hospitality?
How does gender relate to family-business

formation and management in different
settings (e.g. comparing rural with resort
and urban)?
Culture and ethnicity
Culture as a determinant of the business envi-
ronment has yet to be examined in the context
188 Chapter 13
206
of the family business in tourismand hospitality.
It seems reasonable that the family business in
tourism and hospitality vary across cultures,
both in terms of opportunities and business
types. Ethnicity is known to be a factor in family
business generically, such as its close associa-
tion with ethnic-immigrant communities and
networking among business owners of the same
cultural background.
Are some cultures more supportive of

family-business formation in tourism and
hospitality?
How does ethnicity (or other cultural

factors) shape networking among family-
business owners?
Professionalism
Working with employees is a common issue for
owners in tourism and hospitality businesses,
whereas transition to a professionally-managed
firm is a rather rare occurrence. Although a
number of goals and challenges related to
familystaff relationships have been identified
in this book, the research evidence is slim.
What are the benefits and costs or risks

for family-business owners who want or
need to hire and manage employees? (e.g.
Does the home-based accommodation
sector restrict the choices and increase
scope for owneremployee tension?)
What sizes and types of business in this

industry lend themselves to professional
management?
How does professional management affect

the potential for involving children and
ultimate inheritance of the business?
The family in society
We explored the environmental attitudes
and practices of family-business owners, but
that was a fairly superficial introduction to
this broader theme. From a community-
development perspective, family businesses
should be valued and nurtured. The ways
in which they network and do business are
important for local politics and community
viability.
Are family businesses in tourism and

hospitality inherently oriented toward
achieving environmental responsibility
and community viability?
How can community and environmental

sustainability be increased within the
family-business sector?
There are an endless number of potential
research questions that could benefit this field.
Those mentioned above should be viewed as
examples, based on obvious gaps in the litera-
ture. In the ensuing section, propositions are
used in theory-building, and while they are put
forwardwithsome degree of confidence, it is also
recognized that they should be expressed as
hypotheses and tested.
Theory-building
Although a case has been made for taking
an industry-specific approach to family business
studies, which would have the affect of
broadening family-business studies, the main
theoretical concern in this book is to encourage
systematic application of a family-business
perspective within tourism and hospitality.
To accomplish this aim, a conceptual frame-
work has been developed to advance theory
and shape research on family-business issues
within the tourism and hospitality fields.
This framework (Fig. 1.4) places the family
at the core, suggesting that some or most busi-
ness decisions are rooted in a family vision that
makes the family firm unique. Understanding
the family vision and how it shapes a business is
the essential starting point of family-business
studies. Mainstream entrepreneurship and
small-business studies do apply to a point, but
there is a great need to start with the premise that
owner-operators will behave differently.
Family-business studies embody an evolu-
tionary perspective in which ownership, family
and the business change over time, inter-
dependently. Family ownership has been
neglected in hospitality and tourism, and
considered mostly as a minor variant
within small-business and entrepreneurship
themes. Inter-generational ownership issues and
succession are also neglected issues.
207
A number of industry-specific modifiers
have been identified, and certainly more can be
expected to emerge from research. It is impor-
tant to explore these connections as they shape
the appeal of tourism and hospitality business
ventures as well as many of the family-related
rewards and challenges. A new theme to
emerge, not covered in generic family business
studies, is that of families and development. It
has been highlighted in tourism and hospitality
because the family business is often of critical
importance in peripheral and rural areas to the
community, economy and environment. This
theme also introduces the importance of setting
modifiers, as family business is greatly impacted
by location, culture and level of economic
development.
Use of this framework will provide a more
theoretically integrative base for exploring family
business issues in tourism and hospitality. By
way of focusing attention on the key research
gaps and theoretical issues, a set of major propo-
sitions can be advanced for consideration. They
should be viewed as starting points for research-
ers interested in developing theory in this field.
The propositions stated in this section are
quite different from the research questions sug-
gested above. Those were derived froman anal-
ysis of gaps, whereas the propositions below are
derived fromthe authors existing understanding
of this field. Addressing the research questions
mentioned above will advance theory in this
field, as will testing these propositions.
Family vision
At the core of family business studies is the fact
that many owners put family interests ahead of
purely business interests; they behave differ-
ently from profit- and growth-oriented entrepre-
neurs and corporations. Many owners have a
vision for what the business can do to help the
owners and their families realize personal goals,
typically related to autonomy (being ones own
boss and hands-on work), living in the right
environment (especially in resorts, islands, small
towns and rural areas), and enjoying a desired
lifestyle (often specific to leisure interests). As a
result of the family vision, many family-business
owners are content to remain small and tend to
avoid debt and risks.
The family vision, surprisingly, usually does
not include the involvement of children, or
passing the business on to the next generation.
Involvement of children, and inheritance within
the family, are very infrequent occurrences
within the tourism and hospitality industry for a
variety of reasons, not the least of which are the
facts that many such businesses cannot be sepa-
rated from the family home or farm, or are not
viable entities that can support children. As well,
many children do not share the family vision and
get away fromthe home as soon as possible. The
nature of the work itself probably discourages
many from even considering tourism or
hospitality businesses.
There are many issues to explore related to
the family vision and its impact on tourism and
hospitality businesses, communities anddestina-
tions. We will examine a number of propositions,
below, that are derived from the literature
and the authors collective research efforts. The
nature of propositions is that they are put for-
ward as being true, based on available evidence,
but should nevertheless be tested in a variety
of settings, using a range of methodologies. As
the propositions become hypotheses for testing,
they directly assist in theory-building.
Propositions
P 1. The core family vision in most family busi-
nesses in tourism and hospitality is focused
on the lifestyle, autonomy and locational
preferences of the founders; it is therefore
a barrier to business growth, profit
maximization and new venture creation.
There appears to be some degree of univer-
sality in people seeking autonomy through
business, but it is possible that the lifestyle vision
is much more feasible in developed economies.
Conversely, in lesser-developed economies it
might be expected that many family businesses
are established because of a lack of choice.
Many family businesses are known to be
established by immigrants in new countries as
well as by returning migrants who have made
money elsewhere. In these circumstances, do
the owners and families behave differently? How
does business performance, including growth,
vary according to the family vision or other
founding motives?
190 Chapter 13
208
A key research question has to be: under
what circumstances, or with what assistance, will
family businesses grow? It is likely that most
cannot grow because of structural limitations
(i.e. personal financing and hands-on manage-
ment), even if the owners desire it. Will training
opportunities achieve more growth than finan-
cial incentives? To what extent can partnerships
and new technology assist the family-business
owner in becoming more efficient and therefore
more profitable?
P 2. The unique opportunities for tourism and
hospitality businesses in rural and periph-
eral areas will result in a preponderance of
lifestyle-oriented, family-business owners.
No systematic comparison has been made
of motives and goals in different business set-
tings, but the research evidence strongly suggests
that in rural, island and resort settings there are
definitely unique opportunities within tourism
and hospitality that do attract and sustain
lifestyle-oriented families. But what of large
resorts and cities? Are they more likely to attract
the profit- and growth-oriented entrepreneur?
Can family businesses compete with the big
corporations and chains in these settings?
P 3. Following on from P1 and P2, most family-
business owners in tourism and hospitality
will display low levels of entrepreneurship,
specifically in terms of risk-taking,
innovation, growth and new ventures.
Research has demonstrated the existence
of profit- and growth-oriented entrepreneurs
as a small minority of tourism and hospitality
family businesses. They tend to be attracted
to businesses with greater potential for profit
and growth, and to involve more children. But
what comes first family involvement or profit?
They also tend to purchase rather than set up
new businesses, so agencies seeking economic
growth and new jobs might be wiser to fund
these entrepreneurs rather than putting money
into the creation of new, small businesses.
It is possible that innovation and growth
might vary by setting, culture, and level of
economic development. A comparison of a
newer, mountain resort (Canmore, Alberta)
with an older, more traditional seaside resort
(Bornholm, Denmark) revealed that the family-
business owners in Canmore were in general
more profit- and growth-oriented. Did the
environment especially lower seasonality of
demand make the difference? Or was this a
cultural difference reflecting underlying values
and attitudes in Denmark and Canada?
P 4. Goals of male and female owners in
copreneurial businesses (i.e. those oper-
ated by couples) are likely to be identical.
P 5. Female entrepreneurs, specifically those
involved in home-based businesses,
display a different set of motives and
challenges from those exhibited by the
copreneurial family business. In female-led
family businesses there is greater scope for
dissention on goals and business roles.
A great deal of research and discussion in
the literature has focused on female entrepre-
neurs, and on the disadvantages or barriers they
typically face, but in businesses ownedand oper-
ated by couples, the limited evidence suggests
that male and female goals are largely identical.
This observation deserves more detailed exami-
nation, including a comparison between females
acting alone and those working with partners in
running a business. Family business researchers
should, in fact, be more interested in family
dynamics, such as the interplay between family
members by gender, age, and degree of interde-
pendence. One focus for this line of research
should be the examination of how families
identify and resolve issues pertaining to their
business.
P 6. Sole proprietors, although more likely
to adhere to mainstream entrepreneurial
business goals and practices, nevertheless
involve family in business operations and
decisions.
Sole proprietors might not consider their
business as a family business, yet they will find
it difficult to separate completely their business
and family lives. Many do involve spouses or
other family members, formally or informally,
although not in ownership. In couples, where
one partner runs a business and the other has
separate employment (which is particularly
the case with many female-operated, small
accommodation and retail operations), there is
ample scope for either informal assistance or for
conflict.
P 7. Larger firms are more appealing for
purchase by growth- and profit-oriented
209
entrepreneurs; in turn, these will offer
more scope for employing and challenging
family members.
As mentioned earlier, does family involve-
ment come before or after business growth? It
has been claimed that business founders do not
create family firms, and the family business part
comes later. Certainly larger firms offer more
scope for employing and challenging family
members, but is that in itself a motive for growing
the business?
Propositions relating to ownership, family
and business evolution
P 8. Most family businesses in tourism and
hospitality will not be passed on within
the family.
P 9. A primary barrier to inheritance of family
businesses in this industry will be a lack
of shared vision between the generations.
This can be stated with a high degree of
certainty, based on available research within the
industry and family business data in general, but
does it hold true everywhere? The family vision
does not seem to endure across generations.
It might be that living in resorts, islands, small
towns and rural areas is desirable only later
in life, and by the time inheritance becomes
possible the children have left.
P 10. Children in family businesses in this
industry are likely to consciously reject
taking over the family business because
of perceptions of hard work and low
profitability.
The very nature of tourism and hospitality
work discourages many people from entering
or continuing, either in employment or
ownership. Data are needed from children
growing up in these businesses, or perhaps
college students reflecting on their childhood
experiences, to see what effect it has on their
attitudes and careers. A logical sample would
be of tourism and hospitality students, with a
specific hypothesis being: tourism and hospital-
ity students from a family business background
are more likely to reject involvement in the
family firm and potential ownership of a similar
business.
P 11. Family businesses in tourism and
hospitality are most likely sold and
taken over by other family businesses.
Research should be directed at examining
the life cycle of individual businesses within
different settings to see if purchase by different
families is a repeat phenomenon. And if the
vision does occur to children later in life, will they
emulate their parents but in a different place or
business?
P 12. Farm-based family businesses are more
likely to involve a conscious attempt by
the owners to create or pass on a legacy
of land to the next generation.
Many people desire to create a legacy of
land, money or a business for their inheritors.
The notion of legacy deserves more attention
from researchers. To what extent is it rooted in
various cultures? Or has it more to do with strong
ties to the land? Certainly in the tourismand hos-
pitality research cited in this book, the desire for
creating a legacy appears to be linked to farming
in particular. A related issue is that of separating
the tourismbusiness fromthe farming operation.
P 13. In remote and lesser-developed settings,
returning migrants and in-migrants are
likely to be the predominant form of
business ownership in tourism and
hospitality.
Research in the Spey Valley of Scotland
(Getz, 1986) revealed that in-migrants were the
dominant entrepreneurial group in tourism and
hospitality, although many B&B establishments
were founded by natives of the area. Other
academics have noted that returning migrants
have the money and expertise to establish busi-
nesses. A number of issues are raised by these
phenomena, including cultural (is indigenous
culture threatened?), social (the politics of new-
comers versus natives) and economic (control
over the industry).
P 14. Family business in tourism and hospital-
ity will display lower profitability and
higher failure rates than other forms of
business.
This is a more contentious proposition, not
backed by systematic testing but only by direct
observation of the industry. It is based on the fact
that the majority of tourism and hospitality busi-
nesses studied to date, by multiple researchers,
192 Chapter 13
210
have been small and not growth-oriented, and
the industry generally experiences a high turn-
over in ownership. Research should therefore
concentrate on comparing family businesses
between industry sectors.
Propositions relating to industry-specific
modifiers
P 15. The nature of tourism and hospitality
services, often involving a high degree
of hostguest interaction, is both a
motivator for many family businesses
and a source of family branding
(in which the family is the attraction).
This proposition reflects the positive side
of running a tourism/hospitality business. Many
family-business owners seek both autonomy
and hands-on work in this industry, obviously
enjoying meeting and pleasing people. It can
grow tiring and intrusive, but certain personality
types relish the contacts. The desire for social
contacts has been noted to be a motivator,
especially for females inremote andrural areas.
Family branding has not been given much
attentionin the tourismand hospitality literature.
The OReilly case study demonstrates its poten-
tial power for ensuring a sustainable, profitable
family business, but what are the exact benefits
and costs? If the success of a business is tied to a
family name, what happens when ownership
changes or a scandal occurs?
P 16. Cyclical demand, especially seasonality,
has a major negative impact on family
business viability and inter-generational
succession.
Tourism in most destinations experiences
some degree of seasonality of demand, and
in many rural, remote and resort settings the
fluctuations are extreme. This causes major
problems for family businesses, and requires
specific coping strategies that directly effect
family life. The Bornholm research clearly
demonstrated how most family businesses had
toshut downfor part of the year, but alsopointed
out strategies that can be successful in combating
or even overcoming seasonality. The exact
link between seasonality and inheritance has
not been tested, but this proposition follows
logically from available data on the low levels of
inheritance and the marginal nature of many of
the businesses.
P 17. Families adopt both personal and
business strategies that are unavailable
to corporations to diminish or cope with
seasonality.
P 18. Some family-business owners prefer
seasonal breaks from work, but these
businesses will remain small in terms
of employment and profit potential.
These two propositions also get at the core
of family-business studies. For some, seasonality
is not a crucial issue because their business is
secondary to another activity, such as farming,
or even counter-cyclical to other activities like
fishing or forestry. For these family-business
owners, seasonality is a fact of life and not a
threat. To others, the low-demand period (or
off-season) comes as a relief, enabling rest,
vacations, and time for necessary work around
the house and business. These families simply
cope with seasonal demand and will generally
remain small and lack high profitability. Others,
however, combat it vigorously. To economic
development agencies and destination market-
ers, the combaters are tobe valued andencour-
aged. What sets them apart is both a theoretical
and a practical question that cannot yet be fully
answered.
P 19. Families engage in value-adding to their
business in order to generate sufficient
income to hire staff, not for profit
maximization.
The majority of development within fam-
ily businesses in tourism and hospitality appears
to be of the value-adding kind, and not devel-
opment for the sake of growth or attainment of
maximum profits. Owners realize the need for
greater profits, and can achieve this goal through
improved marketing, technology, cost controls,
and possibly expansion. The case studies citedin
this book suggest that expansion is carefully
thought out and usually linked to the desire
to obtain relief from the burdens of being
owner-operators.
P 20. A high concentration of small, family
businesses contributes to resort
decline.
This proposition is bound to be contro-
versial. It follows in part from the observations
211
of Shaw and Williams (1997) concerning the
decline of British coastal resorts, and in part from
the other research cited in this book that points
to the general absence of growth motivations
and entrepreneurship in family businesses.
Researchers might find that it is not the concen-
tration of small, family businesses that leads to
decline, or as argued by Getz and Petersen
(2002), prevents destination repositioning, but
the low number of profit- and growth-oriented
entrepreneurs in a given economy. If that is
the case, special attention must be given to
attracting and encouraging this type of family
business.
P 21. There are more opportunities for family-
business creation by residents in the
early stages of destination development,
but more opportunities for in-migrant
family-business creation and for family-
business growth in the later stages.
The destination life cycle (from Butler,
1980) has been applied to many facets of tour-
ismand hospitality studies, but little attentionhas
been given to the possible links between stages
of the life cycle and family-business opportuni-
ties. This proposition, therefore, is more tenuous
than many of the others.
P 22. Family-business owners in tourism and
hospitality are willing to accept the many
challenges and limitations imposed on
them because of the compensating
benefits relating to lifestyle.
This contention follows from previous dis-
cussion, and it should be possible to put it to a
simple test in any given business environment.
What it does not say, however, is that many
owners donot accept the trade-off between work
conditions and lifestyle, or cannot sustain it over
time, and they leave the sector. To get a com-
plete picture will require surveys of owners and
past-owners of failed, lapsed and sold family
businesses.
Propositions relating to setting modifiers
P 23. Family businesses in remote and rural
settings have a substantial, positive
impact on community and economic
development as well as on cultural and
environmental sustainability.
Some families are motivated to develop a
tourismor hospitality business in order to stay on
their land or in their family home, while others
consciously choose to re-locate to a preferred
setting. Either way, the family in business in
remote areas, small towns, islands and other
peripheral settings, is potentially an important
asset to that fragile economy and community.
Even when the individual family business fails
or is sold, other families are likely to take it
over. No-one has documented this process or
evaluated all its implications. Case studies would
be a logical starting point.
P 24. Networks of family businesses are
essential for development in rural,
remote and lesser-developed settings.
Where there is a long tradition of family
business, it is likely that they have closer links
than with external or non-family businesses.
Partly this will rest on extended family ties, and
partly on preference. Such networks can provide
financial and moral support, increase the mar-
keting reach of small businesses, and even act to
keep out competitors. But where does it work
this way in tourismand hospitality? Howexactly
do the networks work?
P 25. Opportunities for profitable family busi-
ness are maximized in highly developed
economies, cities and popular resorts.
Presumably the more tourism and leisure
demand there is, the more opportunities exist for
family business. But are they crowded out by
large corporations and chains? Is there a position
in the life cycle of the destination that maximizes
or minimizes opportunities for families?
P 26. In lesser-developed economies, tourism
and hospitality sectors offer new oppor-
tunities for family-business creation,
but these will be constrained by culture,
capital and economic dualism.
Many developing countries and regions rely
on tourismto attract foreign investment and cur-
rency, tohelp buildinfrastructure and modernize
the economy. Aside from the potential negative
implications of this process, such as economic
dualism, it does create opportunities for indige-
nous and returning (i.e. re-patriated) investors.
The trouble is that in some cultures there are
severe barriers: cultural (e.g. gender bias, atti-
tudes towards business owners); legal (taxation,
194 Chapter 13
212
inheritance or monetary controls), or economic
(lack of capital or difficulty in borrowing).
P 27. Family business in traditional and indige-
nous cultures will be uniquely shaped by
issues pertaining to communal owner-
ship of resources and control of culture.
Dimensions of family business in indige-
nous cultures have yet to be examined. Even
though communal ownership applies, there are
still opportunities for individuals and families
(sometimes extended to the tribal level) to oper-
ate a tourismand hospitality business. It couldbe
accommodation on communal land, or guiding
services using personally ownedequipment such
as boats or snowmobiles, but the ownership
of culture is another issue. How do personal or
family business ambitions get reconciled with
community decision-making? Does the commu-
nity block innovations in the name of cultural
protection?
P 28. Female entrepreneurship is in many
areas restricted by culture, yet in itself
offers an opportunity to break tradition
and realize womens goals for greater
independence.
Quite a lot of attentionhas been given to the
female entrepreneur in tourism and hospitality,
particularly because so many micro and small
businesses are established and operated by
women. Research is needed on incentives and
barriers specific to women, trade-offs between
family and business, conflict resolution, and
cultural implications.
Chapter Summary
There is a huge scope for theory-building in
the family-business sector in general, and for
industry-specific developments in particular.
We have argued from the books very begin-
ning that an industry-specific approach will ben-
efit the generic field of family business studies,
and that it is important within the context of
understanding tourism and hospitality.
This concluding chapter started with our
assessment of gaps between what should be
known or studied, and what is known about
family business within tourism and hospitality.
Gaps were identified specifically by reference to
the Gersick et al. (1997) life cycle model
incorporating the three axes of business, family
and ownership, as well as through reference to
the generic, family-business themes and topics
identified by Sharma et al. (1996).
What are the most important research
gaps? As this is a new line of inquiry for tourism
and hospitality scholars, there are certainly
many gaps, and more will be identified as
research advances. Without repeating all the
questions raised above, it has to be emphasized
that the most important research projects are
those that either help identify the unique or com-
mon aspects of family business in this industry
(compared with other industries, preferably over
time), and those that help formulate generic,
family-business theory (such as the nature of
constrained or latent entrepreneurship within
families).
In the second part of this chapter a series
of inter-related propositions were advanced as
a step in theory-building. Propositions follow
directly from the authors collective knowledge
and research evidence and represent what we
believe to be the truth. They can and should be
tested in many settings and across industries, but
they can be used as emergent theories.
If this book has one over-riding benefit
to the field of tourism and hospitality studies, to
the industry and its countless family-business
owners, we hope it is in elevating the profile
of family-business issues. If successful in
realizing that goal, it should result in more and
better research, more effective policies, better-
managed businesses, more competitive destina-
tions, and more students inspired to study the
family business in tourism and hospitality.
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Index
Aboriginal/indigenous 17, 18
access(ability) 15, 16
accommodation 1216, 4345, 48, 49, 54,
9799, 101, 102, 127
age 7, 44, 45, 47, 49, 50, 57, 99, 106
Alberta 17, 47, 75, 100
Alborak Stables 117120
alliance 8, 83, 84
analyser 77
antecedent 5860
reguiderna 151152
arts/crafts 13, 48, 49, 53, 54, 5658, 90,
110
attitude 5, 6, 54, 55, 89, 95, 99, 110, 111
attractions 12, 44, 47, 49, 153160
Australia 2, 4, 58, 62, 70, 100
Austria 43, 96, 97, 101, 102
autonomy 1, 2, 12, 42, 43, 45, 46, 47, 5155,
62, 73, 77
balancing 71, 75, 76, 95114
Bali 102
Baltic 100
barriers to inheritance 105111
bed and breakfast (B&B) 4, 5, 7, 1416, 42,
44, 4749, 51, 52, 54, 56, 57, 69, 71,
74, 80, 86, 97, 99, 100102, 104, 108,
117
Billabong Sanctuary 157160
board(s) of directors 8, 62, 63, 81, 100, 112
Bornholm 14, 16, 4658, 80, 8590,
108110
boss (being ones own) see autonomy
boundaries 99
business 4
axis 58, 10
centred family 42, 47
cycles 85
environment 1215, 26, 175
idea 26
opportunities 14
planning 6062, 164, 166167, 176
campground 13, 14, 42, 44, 47, 48, 88, 110,
122, 123
Canada 2, 16, 17, 47, 58, 62, 86, 117, 123, 148
Canmore 16, 4658, 108, 109
capital 8, 9, 13, 14, 35, 58, 6062, 69, 71, 74,
96, 102, 169170
capitulating 89, 90
caravan park see campground
careers 74, 96
cash flow 3, 8, 14, 61, 62, 69, 71, 73, 79, 86,
107
catering 12, 13, 15, 44, 69, 70
challenges 3, 810, 51, 5257, 95
change 67
characteristics 44, 49, 50
children 38, 12, 44, 47, 49, 51, 58, 59, 63,
71, 76, 87, 90, 9599, 100106,
107108, 163, 164
closure 8789
combating 89
communication 34, 73
community 34, 1618, 3334, 68, 97, 184
company 1, 44, 49, 51, 62, 108
competition 69
competitiveness 3, 13, 15, 57, 70, 71 7779
209
227
conflict 7, 74, 96, 100, 101, 106
consultant 75
control 7, 10, 12, 42, 62, 63, 74, 79, 81, 95,
102, 111
coping 8889
copreneurs 5, 7, 12, 27, 44, 47, 49, 54, 56, 59,
62, 70, 96, 98, 102, 103, 108, 186, 188
Cornwall 42, 58, 61, 67
costs 69, 70, 83, 87
couples see copreneurs
cousin consortium 5, 6, 9, 10, 62
Crete 97
Cricklewood Hotel 129130
cross-case analysis 161
Crystal Creek Rainforest Retreat
(CCRR) 133135
culture 7, 17, 23, 60, 72, 74, 96, 100102,
107, 170, 175, 188189, 194195
customer 78, 44, 82, 84, 97, 99, 100, 103
service 167
see also hostguest
cyclical demand see seasonality
Cyprus 102
debt 89, 43, 55, 56, 60, 61, 62, 69, 70, 109,
111
decision (making) 7, 103, 162, 165, 186, 188
defender 77
definition of family business 4, 5, 22, 34, 186
demand 14, 43, 85, 86
Denmark 1516, 4758, 80, 87, 107108, 110
depopulation 4
destination 3, 12, 14, 47, 68, 85, 86, 173,
182184
marketing organization 73
development see economic development
differentiation 80, 82, 121
disharmony see conflict
disposition 5, 9, 81, 89, 170
plan 108, 109
see also succession
diversification 80
see also differentiation
domestic economy 29
dream 106
easy entry 13
economic development 3, 4, 12, 13, 16, 17,
73, 183
economic influence 42, 43, 59
education 44, 49, 58, 164
efficiency 79
employment/employees 2, 4, 8, 1214,
4244, 49, 51, 5759, 63, 78, 8890,
96, 99, 102, 103, 108
unwaged 34
enduring and endangering factors 32
England 59, 61, 68, 85, 86, 99
entertainment 12
entrepreneur(ial) 59, 1217, 21, 34, 43, 46,
47, 56, 57, 59, 60, 62, 68, 70, 98,
101, 102, 110, 142, 163, 165, 175,
188
behaviour cues 25
culture 23, 60
family 34, 163
female 7, 34, 101, 102, 181
founder 32, 165
growth 6, 9, 12, 47, 56, 58, 62, 68, 73,
77
guises 27, 165
lifestyle 16, 30, 43, 57
necessity 30
opportunity 29
process 21
serial 29
social 30
socio-economic outcomes 35
spirit 37
entry and exit 8, 13, 34, 175
environment(al) 45, 47, 5152, 58
forces 70
responsibility 100
ethnic 28, 72, 84, 170
Europe 2, 10, 16, 42, 57, 59, 86, 89
expansion 5, 6, 10, 80
experience 13, 58, 67
export 57, 80, 89
factor analysis 4547, 5256
failure 3, 13, 60, 6770, 192
family
advantage 72
agreement 100
axis 57, 10
branding 8, 13, 78, 81, 84, 112
council 63, 64, 100
enterprise continuity plan 100
family centred business 42, 47
210 Index
228
influence 59
involvement 4, 5, 8, 11, 119, 164
labour 83
roles and relationships 7, 99, 111, 119,
164
syndicate 62
trust 8, 62, 64
familiness 34
farm/farmstay 2, 6, 1416, 4244, 47, 57, 69,
84, 100102, 104105, 110, 111,
117126, 164
feasibility 113
females see gender
financial 8, 9, 15, 73
management 165, 177
stress 86
Finland 15, 43
formalization 5, 6, 10
founder 58 , 41, 63, 71, 98, 106, 107, 111,
112
franchise 5, 13, 84, 121122, 141, 166
gender 78, 17, 28, 44, 45, 49, 50, 51, 54,
5659, 9698, 101103, 107, 111,
170, 181
Germany 104
goals 2, 5, 7, 34, 4147, 5156, 68, 75, 76,
96, 98, 102104, 108
governance 6264
Greece 102
growth/growth-oriented 2, 5, 6, 7, 8, 9, 12,
41, 51, 5457, 62, 67, 68, 7073, 76,
77, 108
see also entrepreneur, growth; expansion;
value-adding
guest see customer; hostguest
guest ranch see campground
Gunnar and Maude Bergstedt 127129
heir(s) 7, 9, 71, 81, 105107, 110113
see also inheritance; succession
hobby 42, 43, 57, 162
see also leisure
home life 97, 101
homosexual 98
hostguest 13, 97, 99, 100
hotel/motel 6, 13, 15, 16, 43, 44, 4749, 57,
61, 62, 6970, 8589, 99, 108, 110,
127132
human resource management 8, 166
see also employment; jobs
implementation 76
income 8, 12, 15, 43, 44, 51, 53, 61, 71, 110,
111
see also cash flow; profit; revenue
incorporation 73
industry 6, 12, 13, 16, 71
see also tourism/hospitality
industry-specific modifiers 11, 12, 29, 112,
113, 193
inheritance 3, 6, 9, 44, 47, 57, 58, 59, 64,
71, 76, 79, 90, 104106, 108,
111113
see also succession; heir
innovation 3, 7, 55, 58, 71, 72, 73, 76, 77
intergenerational dynamics 71
intrapreneuring 28, 76
investment 3, 5, 12, 14, 42, 47, 61, 72, 79,
81
re-investment 71, 73, 79, 96, 112
involvement 44, 163, 180
Ireland 59, 86, 98, 101
island 16, 48, 87
Israel 17
jobs see employment
Kenya 17
knowledge 72, 73
land 6, 61, 105
law 74
leader(ship) 4, 63, 96
legacy 6, 7, 68, 104105
leisure
interests 6, 12, 51, 54, 162
time 8, 97, 99, 102104
life cycle 57, 9, 14, 16, 62, 76, 9699, 194
life stage 109, 110
lifestyle 2, 6, 7, 12, 14, 15, 17, 28, 42, 43,
4547, 51, 52, 54, 68, 77, 101103,
162, 191, 194
liquidity 63
local owners 100
location 6, 1416, 51
Index 211
229
males/men see gender
management 2, 70
Margaret River (Australia) 44, 45, 47, 155
market area 73, 80
marketing 8, 73, 81, 166, 176, 183
co-operative 8, 84
married couples see copreneurs
maturity 5, 6, 10
micro-business 28, 44, 111
see also small business
migrant/migrate 6, 12, 14, 47, 58, 59, 101,
102
Millestgrden 130132
Minnewanka Tours 148151
mission statement 75
money see income; profit
Montana 43
motive/motivation 1, 2, 5, 6, 12, 14, 4143,
59, 73, 102
see also goals
Nepal 102
nepotism 77
Netherlands, The 63
network(ing) 8, 72, 84, 166
new
market 80
product 80
venture 58, 80
New Zealand 43, 58, 68
niche market 1316, 68, 78, 81, 82
non-economic factors 22
Northern Ireland 59
Norway 86
OReillys Rainforest Guesthouse 62, 64, 78,
135143
Ol MacDonalds 123125
opportunity 58
organizational
behaviour 32, 33
modifiers 32
organization 62, 63
owner(ship) 16, 10, 41, 4749, 50, 51,
6264, 101, 168171, 185, 192
agreement 42, 63
axis 810
packaging 82, 83
parents 7, 44, 59, 68, 76, 9799, 105, 111
partner(ship) 46, 8, 10, 37, 41, 44, 49, 61,
62, 152, 168
paternalism 96
Pelham Estate Family Winery 153155
pension 49
people skills 13
perceptions 107, 111, 113
peripheral 2, 3, 16, 82, 87
personal characteristics 26
Perth 43, 44
planning issues 74
policy 3, 13, 37
population ecology 70
portfolio 28
Portugal 59
preconditions for growth 72
prestige 45, 47, 53, 54, 59
price 82, 83
pride 105
privacy 13, 60, 69, 97, 99, 101, 103
professional(ism) 8, 41, 62, 63, 74, 81, 96,
189
profit(ability)/oriented 2, 4, 8, 12, 14, 41, 42,
4547, 51, 5356, 60, 62, 68, 70, 76,
88, 192
property 53, 54
see also real estate
purchase(r) 41, 56, 57, 69
quality 3, 78, 80, 82, 83, 136, 157
Queensland 60, 101
reactor 77
real estate 8, 9, 14
recreation 15, 16, 48, 49, 51
reformulation 78
regeneration 78
regional development agencies 37
regulations 71, 73, 74
relationship marketing 82
renewal 78
research 81, 186189
resort 12, 14, 16, 43, 44, 48, 133144
resource 15,16, 34, 72, 73, 100
responsibility 3, 4, 7, 100, 164
212 Index
230
restaurant/cafe 6, 15, 49, 54, 56, 57, 83, 88,
89, 108, 110
retail(er) 13, 15, 44, 49, 57, 89, 90
retire(ment) 9, 42, 47, 51, 53, 54, 81, 98, 110,
112
revenue 68, 71
see also income; profit
risk 15
Rivendell Gardens 155157
rural 1, 2, 3, 6, 12, 13, 15, 42, 43, 45, 47, 59,
99, 102, 104, 105, 110
sale/sell see disposition
satisfaction 97, 102104
scope of family business 1, 2
Scotland 84, 86, 99, 101
seasonality 8, 1416, 48, 53, 61, 69, 80, 83,
8590, 96, 102, 104, 110, 167, 177,
193
security 5354
self employment see employment
serial 29
service(s) 8, 13, 15, 44, 47
setting modifiers 11, 1418, 31, 194
share(holder) 63
sibling 5, 6, 8, 10
significance of family business 1, 2
small business 1, 2, 5, 9, 12, 13, 15, 16, 31,
41, 44, 48, 57, 58, 59, 62, 63, 67, 69,
70, 71, 80, 81, 84, 85, 87, 100, 101,
107, 108, 111
smallness 32
see also micro-business
social 29, 43, 45, 59
and business systems 32
legitimacy 24
networking 85
sole proprietor 4, 44, 47, 49, 51, 54, 56, 62,
70, 191
Spain 100102
staff see employment
stakeholder 100
start (start-up) 5, 6, 10, 4166, 118
stewardship 6, 100, 105
stimulation 46
strategic planning 74, 75
strategy 6, 63, 7785, 99, 100, 166, 187
strengths of family business 77
students 14, 106
success 67
succession 3, 4, 5, 9, 10, 12, 41, 81, 89, 170,
179180, 187
planning 104109, 111113
see also disposition; heir; inheritance
successor 9, 96
see also heir
supply 85
sustainability 68, 7879, 100
sustainable development 15, 75, 105
Sweden 67, 104, 107, 127, 130
SWOT 75
target markets 86, 87
Taunton Farm Holiday Park 120123
taxes 43, 108
technology 79, 94, 165
themes in family business 9, 11
theory-building 189195
Third World 43
time management 99
pressure 13
tour operations 12, 16, 44, 47, 49, 57, 82, 88,
89, 104, 108, 145152
tourism/hospitality 3, 4, 12, 13, 14, 15, 16,
4244, 48, 49, 68, 79, 8590, 96, 100,
102, 104, 105
training 8, 33, 41, 48, 58, 73, 78, 81, 87, 99,
101, 103, 107
transport 49
Turkey 62
UK 13, 14, 15, 42, 58, 59, 61, 67, 69, 81, 95,
104
uniqueness 79, 82
urban 14, 15
USA 2, 67, 71, 98, 104, 106
value-adding 8, 58, 73, 78, 79, 193
values 4, 6, 5860, 68, 73, 76, 95, 96, 100,
101, 105, 107, 162
viability 14, 107
Victoria (Australia) 43
vision 5, 1012, 60, 63, 73, 75, 76, 95, 96,
106, 111, 190
Index 213
231
weaknesses of family business 77
Western Australia 14, 43, 46, 47, 55, 58, 97,
100, 102104, 108
Western Samoa 17
Wild Over Walpole (WOW) 145148
winery 44, 82, 153157
women see gender
word of mouth 82
workload/work hours 14, 60 , 99, 102, 104,
110
yield management 79, 80, 83, 86
young business family 5, 6, 10
214 Index
232

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The Family Business in Tourism and Hospitality

its scope and significance;

management of the family business;

economic and community development.

Survival (market entry,

Rational analysis versus

Evolving the owner-

Balancing unitary control with

Choosing and ownership

Developing a process for

Defining the role of

Controlling the fractional

Managing the complexity of

Creating a family business

Creating a workable marriage

Making initial decisions about the

Working out relationships with the

Managing the midlife transition

Separation and individuation of the

Facilitating a good process for initial

Encouraging productive conflict

Managing the three-generation

Senior generation disengagement

Generational transfer of family

Criteria for defining a family business

Types of family businesses

Their unique strengths (e.g. family branding; loyalty) and

Evolution of ownership, the family, and the business

Succession and estate planning

Barriers to involvement of children

Ownership, control and organizational structure

The owner/founder, CEO and Boards of Directors

Family vision (e.g. taking the long-term perspective)

Strategies and strategic planning

Motives and goals

Reluctance to pass the baton

Family culture (e.g. the legacy; innovation)

Copreneurship (couples working together)

Variations in family business

Influences of culture or ethnicity

Working with employees

Transition to a professionally managed firm; professional advisers

Social and community responsibility

Environmental attitudes and practices

Social and family networking

Sparsely populated, and often

Dependent on primary resource extraction

Relatively isolated communities (particu-

Costly and/or difficult accessibility.

Potentially high impacts on communities

Gender: strong ideological support for

Politics: in Russia there has not been a

Economic: in Tajikistan (former USSR)

Religion: many of the Kenyan people are

Buy themselves and/or family members a

Avoid unemployment and respond to eco-

Earn enough money to allow them to leave

Be a solution to adversity (Dahles, 1998).

Pursue intrinsic goals such as independ-

Provide an alternative economic means to

Unhappy with position in society

Reversal of highly vertically integrated

Phenomenon of dot.com business